Preapproval is more formal than prequalification and it takes longer: To get preapproved you provide the same paperwork you will be asked for when you make a formal loan application. This will probably include your credit history, employment, and down payment funds, all of which will be verified.
Preapproval guarantees your loan, but it is not a mortgage contract. You can't get the mortgage until the lender can appraise the property and do a title search. (These steps happen after your offer to buy a house is accepted.) When you formally apply for a mortgage, certain facts may have to be reverified. This depends on how much time has passed since the preapproval.
So Why Bother Getting Preapproved?
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It may allow you to lock into an interest rate for a period of time. Even if rates go up while you house hunt, you get the rate you've locked in.
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You may be better able to bargain with a seller. When asked sellers receive an offer from a preapproved buyer, they know that person can secure a loan.
In order to be preapproved, you can expect to be asked for the following information:
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Funds available for down payment from cash and gifts.
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Income
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Credit History
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Employment Record
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Assets (savings, investments, retirement plans. etc.)
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Debts (loans, credit card balances, other mortgages, etc.)
