Steps to get mortgage pre-approved
Mortgage pre-approval is an important step in finding your new home. Read on to find out how to get pre-approved.
If you’re shopping for a home, get mortgage pre-approvedI is one of the very first things you should do. Getting pre-approved means that you submit your information to a mortgage lender who will assess your finances and determine if you qualify for the type of mortgage that is best for you.
Prior approval is not an absolute guarantee of approval. But that usually means you’ll be able to borrow at the rate and terms offered by your mortgage lender. For this to happen, your finances must remain the same and the house you have chosen to buy must be sufficiently valued.
Pre-approval is also important when making an offer. Home sellers want to know that you are pre-approved and are likely to be able to get financing.
So how exactly do you get pre-approved? There are three steps you will need to take.
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1. Shop around for mortgage lenders
Typically, you only want to get pre-approved from a mortgage lender you are likely to get a loan from. This means you should shop around for mortgage rates and terms. before you request it.
You should get quotes from no fewer than three lenders and ideally as many as possible. That way, you can make sure you’re getting the best rates possible.
When you compare lenders, be sure to assess the big picture. Look at the interest rate you are offered, the fees you are charged, and if you have to pay mortgage points. And be sure to compare similar types of loans. For example, don’t compare a fixed rate loan with an adjustable rate mortgage, as they are two different types of loans.
2. Gather your financial documents
To get pre-approved, you need to submit many documents for a home loan application. This is because lenders do a thorough review of your finances before granting you a loan. You should be prepared to provide proof of income such as tax returns and pay stubs.
Many lenders also want you to provide bank statements or some other proof that you will be able to provide a down payment. They will also pull your credit report to see your credit score and the amount of your debts already incurred.
Preparing all of these financial documents can be time consuming, so get started looking for lenders.
3. Submit your application
Once you’ve found a lender with the best loan terms, it’s time to submit your pre-approval request. Many lenders allow you to apply for a mortgage online now, although some require you to visit a local branch in person or speak with a mortgage loan officer.
You will need to provide details of the amount you wish to borrow, as well as submit the financial documentation requested by the lender. You should be able to submit it digitally with most loan providers, especially if you choose to work with an online mortgage lender.
After you submit your information, the lender will review it, which may take some time. Then the lender will let you know how much you will actually be pre-approved to borrow and at what rates. You should have the option of locking in your interest rate if you wish. Additionally, you will receive a pre-approval letter, which you can use when submitting an offer for a home.
Once you’ve found a home, you can provide the rest of the details to your lender. This will hopefully allow you to secure an affordable mortgage that fits your financial needs well.