04/24/2020
How to Get Pre-Approved for a Mortgage Home Loan
The First Step
Before trying to get pre-approved for a home loan, check your credit reports and credit score. By taking this first step early on, you’ll have a better idea of what kinds of loans and interest rates you may qualify for, and you’ll have time to clear up any errors or problems you find on your credit reports before you start shopping for homes.
You can see two of your credit scores for free on Credit.com.
What Else You Need for a Mortgage Pre-Approval
The process of getting pre-approved for a mortgage is actually quite simple. All you have to do is provide your lender with the documentation they require, including:
1. Income Information: Be prepared to supply your loan representative with pay stubs, tax returns, and W-2s from the previous two years, as well as documents that show additional sources of income (a second job, overtime, commissions and bonuses, interest and dividend income, Social Security payments, VA and retirement benefits, alimony or child support).
2. Asset Information: Your lender will also likely want to see information about any of the other assets you have, aside from your income. This documentation can include bank account statements as well as information about investments you’ve made. If a family member or friend is giving you money, you’ll also want to bring documentation of this information (including a gift letter, which shows the money is not a loan).
3. Personal Information: You’ll need to bring a valid form of identification such as a driver’s license or passport, and you will need to provide your Social Security number for a credit check.
As we mentioned earlier, your lender will pull your credit information on their own, so you don’t have to worry about bringing it with you.
Beyond this, the ball is in the underwriter’s court. Pre-approval typically takes two weeks to a month, but with automated underwriters it can sometimes be complete within a day, or even an hour. It all depends on the underwriters and the lender’s pre-approval process.
Within forty-five days, you can attempt to get pre-approved from multiple institutions, because the lenders will know that you’re only trying to buy one home.
Your credit report will only show a single hard inquiry so long as all of your lenders do their research during those forty-five days.
Why Is it Important to Get Pre-Approved?
When you’re ready to make a purchase offer on a home, both your real estate agent and the seller will want to see a pre-approval letter. This document proves you’ll likely be able to make the purchase and, therefore, can be taken seriously.
In a competitive housing market, sellers prefer a pre-approved buyer to a buyer who might be unable to close the deal. A pre-approval on a mortgage lasts 60 to 90 days depending on the lender.
