What is Mortgage Pre-approval?
Though there are several different definitions of "pre-approval" used in the mortgage industry, a pre-approval generally is a written statement from a lender stating the lender’s preliminary determination that a borrower would qualify for a particular loan amount under that lender's guidelines. The determination and loan amount are based on income and credit information. Most pre-approval letters are good for 60 to 90 days.
Why Should You Get Pre-approved?
There are many reasons why you should get pre-approved. The most important reason is that you will get an accurate idea of how much home you can afford. This can help to target your home search and ensure you only look at houses that are truly in your price range.
A pre-approval letter also helps you prove to real estate agents and sellers that you’re a credible buyer and able to act fast when you find the home you want to buy. Some sellers might even require buyers to submit a pre-approval letter with their offers, though having a pre-approval letter does not guarantee that your offer will be accepted by a seller.
A pre-approval letter can make you stand out in a competitive real estate market. If you make an offer on a house without a pre-approval, your offer may not be taken as seriously as an offer from another person with a pre-approval.
How Long Does It Take to Get Pre-approved?
Qualified buyers can get a sharable and printable pre-approval letter within minutes. With traditional pre-approval, the process generally takes 24 to 48 hours.
What If You Can't Get Pre-approved?
Online pre-approval isn’t for everyone. If you’re not issued an online pre-approval letter, you can discuss your options with a lender who, with additional information, may still be able to pre-approve you.