If you’re a first-time homebuyer, listen very carefully. You need to get your home mortgage loan pre-approved before home shopping. This is a crucial part of the homebuying process and is one of the things most first-time homebuyers will likely overlook.
The pre-approval application process is relatively easy. Keep reading to learn what you need to do, what you have to prepare, and where you have to go to get your loan pre-approved.
What Are Mortgage Pre-Approvals?
Home mortgage pre-approvals are letters that lenders issue to signify their conditional approval for your loan. It informs home sellers that the offer given for purchasing the house is legitimate and can be financially supported based on your application.
Bear in mind that conditional approval is not outright mortgage approval. Furthermore, it is also possible that the terms you were offered during the pre-approval may change in the course of the actual mortgage application. Lastly, pre-approvals are usually valid between thirty and ninety days, so it will be best not to apply for one too far in advance.
How Long Do Mortgage Pre-Approvals Usually Take?
The pre-approval process and the time it takes to complete it varies from one lender to the next. Some may release your mortgage pre-approval during the same appointment. Others may take longer than ten days.
You can apply for a pre-approval a month before you need it to give the lender enough time to process it. If, for some reason, you are working on limited time and you need to get a mortgage pre-approval quickly, check the processing time of every lender you are considering.
Are Mortgage Pre-Approval and Mortgage Prequalification the Same?
A mortgage pre-approval is similar to a prequalification, where both are lender-issued letters showing how much loan you can potentially have. The difference is that a pre-approval is a conditional approval, while prequalification is an estimate.
A prequalification is issued under the assumption that all the information you provided in your application is correct. A pre-approval is given after verifying that all the information you provided is indeed true.
How Do You Apply for a Home Mortgage Pre-Approval?
The pre-approval application process is straightforward. You need to go to the lender of your choice, fill out an application, gather all the necessary documents, submit them to the lender, and wait for them to process your application.
Various lenders may have different documentary requirements, but most of them would require documents that show the following information:
- Your identity
- Credit history
- Employment history
- Financial Assets
Tips to Get Your Mortgage Loan Pre-Approved
Here are a few tips to give you the best chance of getting your mortgage pre-approved.
Improve Your Credit Score
Your credit score plays a big role in your mortgage pre-approval and actual mortgage application. You can improve your credit score in two ways: pay all your dues on time and do not apply for new loans. Do this for the next six months, and your credit score will improve. If you are making multiple mortgage inquiries at the same time, it is best to time it within fourteen days. They would consider them as one inquiry and minimize their impact on your credit score.
Consider Different Lenders
In the same way that you want to buy a house at a great price, you also want to find a lender that can give you the best mortgage deal. Get quotes from different lenders and decide from there. Some things that you want to think about when looking for a lender include pre-approval processing time, interest rates, additional fees, and loan terms.
There are many benefits to getting a home mortgage pre-approval. It allows you to negotiate confidently with home sellers and gives you an idea of how to financially prepare for a mortgage.
NetLending is a top-tier home mortgage company in Santa Ana, CA. For years, we have been helping homebuyers get the best mortgage at the best possible rates and terms. Contact us today and become one step closer to acquiring your dream home!