Getting Preapproved for a Mortgage: What to Know, Timing, and Steps

Buying a home is an exciting journey, but it can also be overwhelming. One of the first steps to make the process smoother is getting preapproved for a mortgage. This guide will walk you through what you need to know, the timing, and the steps involved.

What is Mortgage Preapproval?

Mortgage preapproval is a process where a lender evaluates your financial situation to determine how much they are willing to lend you for a home purchase. It involves a thorough review of your credit score, income, assets, and debts. A preapproval letter shows sellers that you are a serious buyer with the financial backing to purchase a home.

Why is Preapproval Important?

1. Credibility with Sellers: A preapproval letter can make your offer more attractive to sellers.
2. Budget Clarity: It helps you understand how much you can afford, narrowing down your home search.
3. Faster Closing: With preapproval, the mortgage process can move more quickly once you find a home.

Timing: When to Get Preapproved

It’s best to get preapproved before you start house hunting. This way, you know your budget and can act quickly when you find the right home. Preapproval letters are typically valid for 120 days, so timing it close to your home search is ideal.

Steps to Get Preapproved

1. Submit Your Application: Complete the preapproval application with your chosen lender. Be prepared to provide detailed financial information.
2. Have Your Lender Pull Your Credit: The lender will pull your credit report to assess your creditworthiness. Note that the credit scores used for mortgages can differ from consumer credit scores.
3. Review Your Credit with Your Lender: Discuss your credit report with your lender to understand your scores and identify any steps needed to improve them. At Pure Rate, we offer a Free Credit Upgrade service to all of our clients. We run your credit through a simulator and show you precisely the steps needed to maximize your credit score and get the best pricing on your loan. Note: You can have multiple lenders pull your credit for a mortgage, and it counts as the same pull. We always recommend getting multiple quotes as some lenders will be significantly better priced.
4. Gather Financial Documents: Lenders will require documents such as pay stubs, tax returns, bank statements, and information on any debts.
5. Review Your Options: Understand all down payment, loan terms, and rate options. Learn if there are any special programs you may qualify for, and understand the impact if rates move up or down on your budget. We always recommend using a rate .5% higher than current market, in case rates spike.
6. Get Added to Pure Rate Watch: Never miss a rate drop, experience smarter rate shopping. Our Rate Alert feature keeps you informed, instantly notifying you when Rates change.
7. Maintain Financial Stability: Avoid making major financial changes, such as large purchases or opening new credit accounts, until your home purchase is complete. Note: If you have any “mattress money,” deposit it ASAP into your bank account. All large deposits must be sourced, but most lenders only look at the last 60 days. So, it’s vital to have cash in the bank prior to the 60 days.

How Rate Shopping Affects Your Credit Score

The FICO score ignores all mortgage and auto inquiries made in the 30 days before scoring. If you find a loan within 30 days, the inquiries won’t affect your score while you’re rate shopping.

The credit-scoring model recognizes that many consumers shop around for the best interest rates before purchasing a car or home, and that their searching may cause multiple lenders to request their credit report. To compensate for this, multiple auto or mortgage inquiries in any 45-day period are counted as just one inquiry.

Final Thoughts

Getting preapproved for a mortgage is a crucial step in the home-buying process. It not only gives you a clear picture of your budget but also strengthens your position as a buyer. By understanding the timing and following the steps outlined above, you can navigate the preapproval process with confidence and ease.

I hope this helps! If you have any more questions or need further details, feel free to ask. Happy house hunting

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For a free real-time quote with no credit checks, www.purerate.com/rates, call/text 704.675.7089, or email info@purerate.com

Our guiding principal is radical transparency, we make significantly less on our loans, and pass the savings on to you. In return we need our happy customers to spread the word. This allows Pure Rate to eliminate marketing expenses and deliver industry leading savings.

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