✅
Getting Pre-Approved for a Mortgage
Learn the most important step to take before you start home shopping.
Before you start looking at homes, it’s essential to get pre-approved for a mortgage. A pre-approval letter shows sellers and real estate agents that you are a serious, qualified buyer. This guide explains what a pre-approval is, why it’s important, and how to get one.
Pre-Approval vs. Pre-Qualification: What’s the Difference?
These terms are often used interchangeably, but they are not the same.
| Pre-Qualification | Pre-Approval | |
|---|---|---|
| Process | Based on self-reported financial information. Quick and informal. | Based on a formal application and verified financial documents. In-depth and official. |
| Accuracy | A rough estimate of what you might be able to borrow. | A conditional commitment from a lender for a specific loan amount. |
| Impact | Helpful for getting a general idea of your budget. | Essential for making a serious offer on a home. |
Bottom line: A pre-approval carries much more weight than a pre-qualification.
Why is a Pre-Approval So Important?
- Know Your Budget: It tells you exactly how much you can afford to spend on a home, so you can shop in the right price range.
- Be a Stronger Buyer: Sellers are more likely to accept an offer from a pre-approved buyer because it shows you are financially able to close the deal.
- Speed Up the Closing Process: Since much of your financial information has already been verified, the final loan approval process is often faster.
- Identify and Fix Issues Early: The pre-approval process can uncover any credit issues or other problems that need to be addressed before you find a home.
How to Get Pre-Approved
The process is straightforward and can often be completed in a few days.
Pre-Approval Checklist
- Gather Your Financial Documents:
- Pay stubs (last 30 days)
- W-2s and tax returns (last 2 years)
- Bank statements (last 2-3 months)
- Photo ID
- Information on any other debts or assets
- Shop Around for Lenders: Get pre-approval offers from at least three different lenders (banks, credit unions, online lenders) to compare rates and fees. This will not significantly impact your credit score if done within a 14-45 day window.
- Complete the Uniform Residential Loan Application (URLA): This is the standard application form used by most lenders.
- Receive Your Pre-Approval Letter: Once the lender has verified your information, they will issue a pre-approval letter stating the loan amount, loan type, and interest rate. This letter is typically valid for 60-90 days.
What to Do After You Get Pre-Approved
- Don’t Make Major Financial Changes: Avoid changing jobs, opening new credit cards, or making large purchases. The lender will re-verify your finances before closing, and any significant changes could jeopardize your loan.
- Start House Hunting: With your pre-approval in hand, you can confidently start your home search.
- Keep Your Pre-Approval Updated: If you don’t find a home within the 60-90 day window, contact your lender to get an updated letter.
Ready to Find the Best Loan for You?
Once you’re pre-approved, the next step is to explore different loan options.
Compare Loan Types