Dont Get Preapproved Too Far In Advance
When you receive your preapproval letter, it will probably say its good for 30 to 90 days. Since thats a relatively short period, youll probably want to wait to get preapproval letters until youre ready to start seriously shopping for a home. And remember, a preapproval is only a conditional approval. If you rack up more debt, change jobs or reduce your savings, you could get denied when you go to get final mortgage approval.
Mortgage Prequalification Letter: 1 To 3 Days
Before you start house hunting, apply for a prequalification letter from a mortgage lender. This will give you a rough estimate of how much a lender could offer you in a mortgage.
Dont wait on a prequalification letter just because youre not sure which lender to go with yet. Its not a contract between you and a lender, so you can get your prequalification letter from one lender and your mortgage from another.
Getting a prequalification letter takes one to three days, and its surprisingly simple. All you need to do is provide a lender your best guess on your income, credit history, assets, debt, and down payment. The more accurate your response, the more accurate your prequalification will be, but most lenders wont require any documentation at this phase.
However, when youre shopping for a home, its important to know where you stand financially. Look at your credit reports, bank statements, outstanding debts, and credit scores. If you dont know what your credit profile looks like, check Credit.coms free credit report.
How Far In Advance Should You Apply For Pre
Purchasing home insurance, sending in an application to buy, closing on a mortgage the timeline of the home buying process can be confusing. The pre-approval sweet spot is right after you decide you want to buy a home and just before you begin touring. Dont apply before you get serious about home buying, but dont wait until after youve found your dream home to apply for a pre-approval.
Your pre-approval will help guide you to houses you can afford and instill confidence in the seller that you want to buy. Thus, you should attend your first showing with a pre-approval ready to go in the event you fall in love and want to put in an offer. However, getting pre-approved before youre ready to start touring and putting in offers might mean that it expires before you find the one.
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A Clear Understanding Of The Mortgage Application And Approval Process Can Help You Move Forward And Make Decisions With Confidence
The process of successfully obtaining mortgage financing can be broken down into 7 steps which we divide into 3 distinct stages. The first stage is to have an initial assessment discussion with a trusted mortgage broker to diagnose your situation and determine the best course of action. The second stage is the pre-approval in which a formal application with supporting documents is submitted and reviewed. Finally, in the approval stage, financing is formally requested and the details of the mortgage contract are finalized.
Each step is explained individually below.
Our mortgage application and approval process is an organized and sequential procedure that helps you progress towards your goals with confidence and clarity. A plan helps you define the scope of your objective and anticipate commonly encountered pitfalls. How long the mortgage approval process takes depends on how busy lenders are and how quickly you can provide the requested documents. We use checklists and diligent communication to keep things moving along. The approximate number of business days to complete each step are shown in brackets.
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Why Is It Important To Get A Mortgage Preapproval
Mortgage preapprovals give potential buyers certainty in their budget. Before they ever start house hunting, theyll know how much they can afford so that they dont waste time looking at listings that are too rich for their pocketbook. This significantly narrows the search and can make the process easier.
In addition to the budgetary benefit, having a preapproval also holds sway with sellers. It shows that you are a serious buyer whos gone and done legwork on financing ahead of time. This makes the deal much more likely to close, which could help set your offer apart from others. This could be very important, especially in highly competitive markets.
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How Long Does It Take To Get Approved For A Mortgage
Terri Williams is an expert in mortgages, real estate, and home buying. As a journalist she’s covered the “homes” corner of personal finance for more than a decade, with bylines in scores of publications, including Realtor.com, Bob Vila, Yahoo, Time/Next Advisor, The San Francisco Chronicle, Real Homes, and Apartment Therapy.
Buying a home is an exciting and memorable time for most people. However, the actual mortgage approval process can quickly dampen the mood, and it often proves to be quite stressful for anxious buyers. But there are things you can do to actually speed up the timelineor at least not delay it.
Well look at the mortgage approval process to help you better understand the process and how you can work to move it along
Mortgage Preapproval Vs Prequalification
The difference between prequalification and preapproval is the level at which the lender looks into your financial history.
A mortgage prequalification may or may not involve a lender pulling your credit report. In any case, they get a verbal or written estimate of your income and assets. This is a more informal step where a lender takes a look at the basics of your finances. These are usually things like your income, expenses and any existing loans and loan payments you might have. Then the lender will make an estimate of how much house you can afford. Depending on your financial situation, you may choose to skip the prequalification step and move right along to the mortgage preapproval.
A mortgage preapproval is much more than this. A preapproval letter is more of a commitment from the lender that, assuming nothing changes with your financial situation and the appraisal goes well, you qualify for your financing. Its further along in the process than a prequalification.
Because a preapproval requires actual verification of documentation and your credit score, you can be much more confident in the terms of the preapproval letter, including how much you can afford at a hypothetical interest rate. Thats why most real estate agents will want you to have a mortgage preapproval letter that you will submit along with any purchase offer you make.
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The Buyer Lost Income Or Piled On Debt
A home buyers ability to repay its mortgage gets based on Debt-to-Income. DTI is the amount of debt a buyer has compared to their income.
Mortgage approvals cap a buyers debt-to-income ratio near 50 percent.
If the buyers debt rises but their income stays the same, the pre-approval may get revoked at the point of purchase.
Can I Put In An Offer If Im Buying Privately
Yes you can. So long as the seller allow.
You can set some purchase conditions. For instance, you might make your offer âsubject to financeâ, or âsubject to pest and building inspectionsâ. ItÃ¢s a good idea to get your solicitor or conveyancer to advise you on this.
Note: when you make a Ã¢subject to conditionsÃ¢ offer, itÃ¢ll have an expiry date. YouÃ¢ll want to factor in how long itÃ¢ll take to get final approval. Best check the timeframe out first with your banker.
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Do You Need To Use The Lender Who Issued Your Pre
At this point, you have started a relationship. You are turning over a substantial amount of private information. The decision usually has been made in your mind to use this person for the loan, Bogan says.
Often, once borrowers start the preapproval process with a lender, they use the same one for their home loan.
But its a competitive industry and youre not locked in. If you find better mortgage options with another lender for example, a better mortgage rate or better loan terms then its worth considering making the switch.
Find A Mortgage Company To Pre
Mortgage pre-approvals are available for free through most mortgage websites with no obligation to proceed. Many home buyers get their mortgage from a different mortgage company that pre-approved them. So, dont overthink this step.
The critical part of getting your pre-approval is that you get it. Without a pre-approval, you cannot buy a home.
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How Long Does A Mortgage Preapproval Last
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Mortgage preapprovals more than 3 months old are generally considered out of date, but letters can last as long as 180 days. Depending on how long your search is, you may need to renew it more than once before closing on a home.
Having a letter of preapproval from a financial institution can help ensure that youre ready to snap up a home you love.
Whats The Difference Between Pre
A pre-approval is a complete look into your financial history and allows the lender to guarantee your approval for a specific loan amount and interest rate.
Pre-qualifications use basic income and credit history to estimate how much mortgage you qualify for, but they cannot be guaranteed.
Pre-qualifications sound convenient, but pre-approvals allow you to submit an offer for a home and simplify the mortgage process once your offer is accepted.
Mortgage pre-approvals give you solid proof that you can get the mortgage you need to buy a home, allowing you to budget appropriately and submit an offer as soon as you find a home.
Mortgage pre-approvals expire after 90 days, so stay in touch with your mortgage expert to refresh if house hunting is taking longer than planned.
Get pre-approved for a mortgage today.
Dan Green is a former mortgage loan officer and an industry expert. He’s appeared on NPR and CNBC, and in The Wall Street Journal, Bloomberg, and dozens of local newspapers. Dan has helped millions of first-time home buyers get educated on mortgages, real estate, and personal finance. Have mortgage questions? Ask Dan in the chat.
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How Long Does A Mortgage Pre
Youve been waiting patiently, you have been saving every penny, making sacrifices to ensure your finances are in order. The time is finally here to start looking for that house you have always wanted. You followed all the advice you can remember, but now that you have finally arrived, what do you do next? This article will explain more.
If you are thinking of buying a home, your very first move should be to get pre-approved for a mortgage . This is true even if you are not quite ready to buy just yet and commit to a mortgage loan
As a family-owned Mortgage Company with experience in the industry since 1992, without a doubt, your very next stop should be a planned visit with a reputable, locally licensed mortgage professional to obtain a mortgage pre-approval. Its a simple step, but one that often gets skipped or overlooked.
Questions To Ask Your Lender Or Broker When Getting Preapproved
When getting preapproved, ask your broker or lender the following:
- how long they guarantee the preapproved rate
- if you will automatically get the lowest rate if interest rates go down while youre preapproved
- if the pre-approval can be extended
Ask your lender or broker about anything you dont understand.
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Understand The Difference Between Prequalification And Preapproval
Both “mortgage prequalification” and “mortgage preapproval” are two key steps in the mortgage application process. Some people use the terms interchangeably, but there are significant differences that you should understand.
Prequalification, or “prequal,” is a cursory overview of your income, assets, debt, and credit by a lender, but you don’t have to provide any paperwork. On the other hand, a mortgage preapproval carries more weight because it’s a more comprehensive application process .
|It tells how much you can borrow||Gives you an estimate of what you can borrow|
|Sellers frequently require it before accepting your offer||Helpful if your financial situation will change in the future|
“Sellers would prefer to see a preapproval letter from the lender to know this is a buyer over a prequalified buyer,” said Nancy Newquist-Nolan, a real estate agent at Coldwell Banker in Santa Barbara, California.
A prequalification can be helpful, though, if you’re just dipping your toes into the mortgage waters. The process will give you an idea of what size mortgage you may qualify for and help you narrow down the search for your new home.
Prequalification may also be worthwhile if your financial situation will change shortly say, because you’re looking for a new job.
Does A Preapproval Letter Expire
Once you have your preapproval letter, you may be wondering how long it lasts. Your income, credit history, interest rate think about all the different ways your finances can change after you get your letter. For this reason, a mortgage preapproval typically lasts for 60 to 90 days.
Once it expires, youll need to connect with your lender again with your updated paperwork and apply for a new preapproval letter. The good news is, this typically doesnt take too much time since they have most of your information on file. But bear in mind that re-applying requires another hard inquiry on your credit rating, and your credit score can be further impacted.
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What Is Mortgage Preapproval
Preapproval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and the lender will verify the information you provide. Theyll also perform a credit check. If youre preapproved, youll receive a preapproval letter, which is an offer to lend you a specific amount, good for 90 days.
What To Do If Your Pre
If your pre-approval is about to expire, that doesnt mean you have to apply from scratch all over again. Just prepare to provide updated financial statements to your lender to prove theres been no change to your income, debts, or credit scores.
Since pre-approvals do have a shelf life, its generally best to not get it until youre seriously looking for a home. If youre just window shopping, it may not be worth the trouble unless you want to know what price house you can afford.
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Can I Purchase A Car Or Change Jobs After I Get A Mortgage Pre
Once you are pre-approved to purchase a home, you can go shopping and narrow down your search. One thing to keep in mind. It’s important not to make any major purchases or major changes in your income.
When you find a home to buy, the lender will look at your credit again. They will check your income again. If you have made changes or increased your debt, then you may no longer qualify for the amount of mortgage that you were originally qualified for.
I had a client who had been searching for a home for over 6 months. She had a good job but was headhunted by a competing company and offered a better job with more income.
She let me know and I let the lender know about her job change. The lender reviewed all the details again and provided an updated approval for my client. If she hadn’t let us know things could have gone badly.
Lenders don’t like surprises. If they check your employer to verify that you work there and you don’t work there anymore, your lender could cancel the mortgage approval and may not change their minds because you didn’t communicate with them.
Once you are shopping for a home and have a pre-approval, make sure you chat with your mortgage broker before making changes.
What Happens After Preapproval
After getting preapproved for your home loan, you can officially start house hunting as you’ll have a better idea of your price range. If you find a home, you can talk to your lender to lock in your rate, bid on your new home and sign a purchase agreement which is the last step before going to your lender to complete the process.
Remember to keep your finances in check during this process.
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How Long Is A Mortgage Pre
Most mortgage pre-approvals are good for 90 days, and theyre simple to refresh at any time.
The mortgage pre-approval is your first big step towards homeownership. And getting pre-approved early in the process simplifies everything that comes next.
No home seller will take you seriously unless you show them that youre qualified. And as valuable as your pre-approval is to a seller, its even more so for you.
Your pre-approval shows exactly how much home you qualify for and is an essential piece of what you need to buy a house. It will give you an estimated monthly housing payment so you can dial in your budget and figure out how much home you want to afford.
So, lets discuss more about how long a pre-approval is good for and when exactly you should get them.