Mortgage Pre-Approvals

It can be hard to shop for a home without knowing how much you can afford. Mortgage preapproval lets you shop smarter and make stronger offers. Let’s look at what it means to get preapproved and how to get started.

What documentation I'll need?

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
• Debt-to-income ratio (DTI)
• W-2 Statements
• Pay Stubs
• Banks Statements
• License
• Social Security Number

Why should I get a Pre-Approval?

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.

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, and makes your offer more attractive to the seller.

• It’s easier to shop: Many real estate agents require you to get preapproved before you shop for a home. Preapprovals make the house hunting process easier for you and your real estate agent.
• It makes your offer stronger: If you’re shopping in a competitive housing market, a preapproval can be crucial to getting your offer accepted. Sellers aren’t just looking for the highest offer. They’re also looking for offers that aren’t likely to fall through. A preapproval tells buyers you can get financed for the amount you’ve offered.
• It gives you time to sort out issues: There are reasons both buyers and sellers may need to get to closing fast. Getting preapproved means you’re getting the bulk of the mortgage process done upfront. That way, once you’ve had an offer accepted, you can just focus on getting ready for your move.

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.

The Bottom Line

A preapproval is a great first step toward buying a home. Once your financial information is verified, you'll have a clear idea of how much home you can afford. Getting preapproved before you start your house hunt benefits everyone involved.