How to Get Pre-Approved for a Mortgage

Pre-approval for a mortgage is a letter from a mortgage lender that indicates how much money you can borrow for a new home. The amount of money you’re approved for will be based on factors like: 

• Credit history/score 
• Employment history 
• Income 
• Assets 

Getting pre-approved for a mortgage is important because it gives you an idea of the loan amount you can borrow. It can speed up the homebuying process because it shows sellers you’re a serious buyer, giving you an advantage when bidding on a home. 

You may have heard of pre-qualification and pre-approval for a mortgage. While both options are important in the mortgage process, they’re not the same. 

Mortgage pre-qualification is a preliminary step that gives you an idea of how much money you can borrow based on your financial situation. It’s a good first step if you’re unsure about how much house you can afford, but it’s important to remember that pre-qualification isn’t the same as a pre-approval. 

Pre-approval for a mortgage is a thorough process that gives you a more accurate picture of how much money you can borrow for a new home. Your lender will look closely at your financial situation, including your employment history, gross monthly income, and credit score. They’ll also require documentation from you, such as pay stubs and tax returns. Based on this information, they’ll give you a more accurate valuation of how much money you can borrow for your new residence. 

The homebuying process can be a lengthy one. So, if you’re serious about buying, then it’s a good idea to get pre-approved for a mortgage as soon as possible. 

Real estate agents often recommend that buyers get pre-approved for a mortgage before beginning their home search. This is because it can save you a lot of time and hassle during the mortgage application. For example, if you’re approved for a certain loan amount, then you’ll know to look only at homes within your price range, and you can bid on those homes with confidence because you know you have been pre-approved up to that dollar amount. 

Whether you’re looking for FHA loans, VA loans, or fixed-rate mortgages, most lenders will require similar documentation from you, including: 

• Identification (driver’s license, passport, etc.) 
• Social Security number 
• Proof of income (pay stubs, tax returns, etc.) 
• Employment verification (offer letter, employment contract) 
• Bank statements 
• Credit score 
• Assets

Once you have all the documentation, you can start the mortgage pre-approval process with your lender. 

There are steps you can take to increase the likelihood of getting pre-approved for a mortgage. These tips may help you get the best interest rate possible and make homebuying easier. 

The mortgage pre-approval process can last from a few days to a few weeks. It depends on how quickly you can gather the required documentation and how responsive your lender is. 

Once you have all your papers in order, the mortgage pre-approval process typically follows this pattern: 

• You submit your mortgage application to your lender. 
• Your lender reviews your documentation and determines if you’re eligible for a loan. 
• If you are, then they’ll send you a mortgage pre-approval letter. 
• You use this letter to start shopping for homes within your price range. 

While a pre-approval letter is not a guarantee that you’ll be approved for a loan, it’s still worth the effort. 

Applying for a mortgage pre-approval usually results in a hard inquiry on your credit report. This inquiry can temporarily affect your credit score by a few points. 

However, if you’re planning to buy a home soon, then the impact of a hard inquiry is typically insignificant because the investigation will stay on your report for only 12 months, and its impact on your score will lessen. 

In addition, having a strong credit history can help offset the negative impact of a hard inquiry. If you have a good credit score and history, then the query is unlikely to affect your credit significantly. 

A mortgage pre-approval is typically good for 60 to 90 days. This time frame is different from a pre-qualification, which is only a loan estimate and not a firm offer of credit. 

If you’re still shopping in the housing market after your pre-approval expires, then you’ll need to get another one. 

If you find a home before your pre-approval expires, then you can usually still use it. Most sellers accept offers that are contingent on the buyer being approved for a loan. So, as long as you can get approved for a mortgage within the contingency period, you should be able to use your pre-approval letter. 

There are several benefits to getting pre-approved for a mortgage: 

• You will know your pre-approved loan amount (this information can help you avoid looking at homes out of your price range). 
• You will have a stronger negotiating position with sellers (a seller is more likely to welcome an offer from a pre-approved buyer). 
• You’ll be able to move quickly when you find the right home (since you’ve already been through the underwriting process, your loan will likely be approved quickly). 

As you can see, there are sound benefits to getting pre-approved for a mortgage. If you’re planning to buy a home shortly, then it’s a good idea to get pre-approved.