No matter how seriously you're looking into buying a new home, getting pre-approved is a beneficial step to the next level. You may have questions about the process, so we answered some common questions for you!
Video recorded on July 24, 2020, rates discussed subject to change*
Should I get pre-approved?
Yes, yes, and yes!
The pre-approval process takes a look at your life and figures out what price you can afford. This is extremely helpful when buying your first home because you might be looking at houses beyond what you can get financed for, or you may have limited yourself when you could afford a higher range than expected.
When you find "the one" house, you want to put in an offer that holds weight. If you put in an offer without a lender behind it, another offer may hold more weight simply because it's backed with a letter of pre-approval.
A pre-approval saves you time! You know what price to be looking for, your offer is more likely to be accepted, and you don't have to suddenly find a lender when the offer is accepted.
How do I start the pre-approval process?
Talk to a lender to begin the process! You can go through your local credit union, retail bank, or mortgage broker.
How long does it take?
While each situation is unique, the range is typically a few hours to a few days. If you are self-employed or had recent changes to your credit, it may require a more thorough review before approval. If you've been at the same job longterm with no major changes recently, you could walk out with a letter of approval in minutes.
What does the lender need from me?
Every lender is different, but they typically need to check your credit, debt, income, and assets. Be prepared with your W2s and most recent paystubs.
What is the difference between pre-approval and pre-qualified?
A pre-qualified letter is based on the information you give a lender. Therefore, a pre-qualification is usually not as accurate. A pre-approval requires pulling credit and other documentation verifying your information, which leads to more accurate approvals.
Is a pre-approval guaranteed?
There are several conditions within a pre-approval letter that must be met to get the desired loan. These may include needing to sell your home, home inspections, the property condition, insurance, closing costs, application fees, and more.