Pre-Approval process for A Mortgage

Before you’re preapproved for a home loan, work with your lender to verify your financial information and obtain a loan estimate. Let’s walk through each of the steps and review the parts of the process you’ll be responsible for.

Credit Rating

The minimum requirements for the pre-approval is a credit ranking of 700 from 2 of the 3 credit rating systems.

Documentation Required:

The preapproval process is essentially a mortgage application. This means your lender or loan officer will want to take a comprehensive look at your finances. You should be prepared to provide information on the following:

  • Proof of income
  • Employment verification
  • Proof of assets
  • Credit history
  • Identification

Before starting the preapproval process, you'll want the necessary documentation to ensure the process goes smoothly. Here are a few items you should have on your mortgage preapproval checklist:

  • W-2 statements
  • Pay stubs
  • Bank statements
  • License
  • Social Security number

Once you've submitted all your information to the lender, you can expect to receive your loan estimate within 3 business days, though this may be much shorter if you use an online mortgage lender. The loan estimate will let you know whether you've been preapproved and for how much.

Know When To Get Preapproved

Preapproval isn't just for your lender. Knowing how much mortgage you can expect to take out is also highly beneficial to you as a buyer, and it can help you narrow down and focus on your best options.

That means the best time to get preapproved is at the start of your home buying journey. If you know you're in the market for a new home, apply for preapproval now to get an early picture of your mortgage options and show agents you're a serious buyer.

Get Your Credit Score Checked

Preapproval usually requires a hard inquiry into your credit. While this may cause your credit score to drop slightly, it won't hurt your credit in a significant way. Subsequent inquiries from other mortgage lenders within the same time period (usually about 45 days) won't affect your score at all.

Receive Your Mortgage Preapproval Letter

When you get preapproved, you usually get a preapproval letter. There are a few reasons the preapproval letter is important. First, real estate agents typically want to see your preapproval letter before they show you houses. This ensures they don’t waste time showing you homes outside your budget.

Second, the preapproval letter is something you can share with the home’s seller when you make an offer. It shows you won’t have problems getting financed for the amount you’re offering.

Understand How Long Preapproval Lasts

Preapproval doesn't last forever. Check your expiration date and keep it in mind as you look at homes. Though it varies from lender to lender, preapproval is typically valid for 60 – 90 days. If you haven't settled on a house, you can request a renewal by giving your lender your most up-to-date financial and credit information.