Do You Really Need a Mortgage Pre-Approval?
When shopping for a home, especially in a competitive market, you want to submit the strongest offer possible. And one of the ways you can show you’re serious is with a mortgage pre-approval. Here is what you need to know about this valuable step in the real estate buying process.
What Does Pre-approved Mean?
Getting pre-approved means that your lender has reviewed your financial history and made an initial determination about the amount of a loan you could qualify for. Keep in mind that the pre-approval letter is not a formal offer for a loan; once you have a home under contract, your request will go throughout the underwriting process before being approved for a final amount and interest rate.
How Long Does a Mortgage Pre-approval Last?
Once a lender gives you a mortgage pre-approval, it’s time to start shopping. That’s because a pre-approval letter is only good for a certain period of time. In most cases, it will expire in 60 to 90 days, but that timeframe can vary. While you can always ask your lender to renew your pre-approval, that may also mean that you need to provide updated financial information.
What’s Needed for Pre-approval?
While each lender may have slightly different requirements, you should be prepared to have the following information ready when you seek pre-approval:
- Recent pay stubs
- Two years of tax returns
- W-2 forms from the past two years
- Bank and investment account statements
- Monthly debt payments
- Residential history
- Divorce decree and any court orders for child or spousal support, if applicable
If you have complete information, you can get pre-approved in as little as the same day to up to a couple of weeks.
Should You Get Pre-approved by More Than One Lender?
While many homebuyers consider only one lender, you may want to shop around. That way, you can compare the rates and different lending programs. If you apply for pre-approval with multiple lenders in a short period of time, all their credit inquiries count as just one so they won’t negatively impact your credit score.
Give yourself an edge when shopping for a home with a mortgage pre-approval. Ready to get matched with a great real estate agent?