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Why You Should Get Pre-Approved for a Mortgage Loan

Think of a mortgage pre-approval as a “physical exam” for your finances. Lenders will look into several key factors of your financial life to determine the likelihood that you’ll repay your mortgage. These include: Credit history Credit score Debt-to-income ratio Employment history Income Assets and liabilities Don’t confuse pre-approval with prequalification. Getting prequalified tells you what loan amount you are eligible for based on your income and debts, but it carries no weight when making offers. Neither one guarantees you’ll eventually qualify for the loan, but if you’re serious about buying a house, make sure to get pre-approved, not just prequalified.

Pre-approval letters from mortgage lenders are typically valid for 60 to 90 days. There’s an expiration date because finances and credit scores change over time. Because pre-approval involves a hard credit check that can impact your credit score, you should be careful about the timing. Seek your first pre-approval six months to a year before starting a serious home search, especially if you suspect you might have difficulty getting a mortgage. The pre-approval process can help you uncover credit issues and give you time to address them. Then, get pre-approved a second time once you’re ready to start making offers. Hopefully, your financial standing has improved by now, and you can qualify for a lower interest rate and possibly even a higher loan amount.

How to Get Pre-Approved for a Mortgage

The pre-approval process can take as little as a few hours or up to several days. The timeline varies by lender and the complexity of your financial situation. Wonder what’s involved in getting pre-approved for a mortgage? The first step is to complete a mortgage application. Be prepared to provide identifying information, including your Social Security number, so the lender can perform a credit check. The documents needed for mortgage pre-approval