Mortgage pre-approval: What you need to know

If you’re shopping for a home, you should get a mortgage preapproval. A mortgage preapproval helps you understand how much house you can afford, makes you more attractive to sellers, and alerts you to problems that may affect your ability to get a loan. To get preapproved, you’ll need to provide your lender with documents they’ll use to verify your personal, employment and financial information.

First Steps to Homeownership

Getting preapproved for a mortgage is a crucial first step in the home-buying process. It gives you an idea of how much you can borrow, which will help narrow down your search to houses in your price range. The preapproval process could also uncover potential issues that would prevent you from getting a mortgage, so you can work them out before setting your heart on a house.

A mortgage preapproval lets sellers know you have the borrowing power to back up an offer you make to buy their home, which could make your offer more competitive. It tells real estate agents, who work on commission, that spending time on you could well pay off with a transaction. And it alerts lenders that you’re a savvy borrower who may soon be taking out a mortgage loan.

In short, getting preapproved for a mortgage signals that you’re serious about buying a home.

Fortunately, getting preapproved is relatively quick and simple. Let’s explore what you need to do for a mortgage preapproval and how it can benefit you during the home-buying process.

Gather the appropriate documents

Lenders will want to verify your identity, credit history, employment history, income and financial assets to issue a preapproval. They’ll likely ask you to fill out a uniform residential loan application (almost everyone calls it a 1003 or “ten-oh-three” — here’s an example).

The 1003 application asks for your personal information, financial information and loan information, including …

- 2 months of pay stubs
- 2 years of tax returns
- Bank statements
- Bank accounts, retirement, and other accounts
- Any other assets you have
- Property you own
- Income and employment details
- Employer contact information
- Debts you owe or other liabilities

Research Mortgage Lenders
It's important to do your homework before choosing a lender. You should research the lender and even the loan officer who would be handling your mortgage — there can be a big difference in knowledge and experience depending on who processes your application.

After you choose a lender, you’ll provide the information needed to complete the preapproval process. An underwriter may examine it to determine how much you can borrow. If an underwriter hasn’t reviewed your application, you haven’t been fully preapproved — so be sure to ask about the status of your application during the process. 

Once the lender has all the documents it needs, it typically only takes a few days for the lender to let you know whether you’re preapproved and how much you’ve been approved for. But the preapproval process can take longer if you have a past foreclosure, bankruptcy, IRS lien or poor credit.

 
Consider working with multiple lenders
Just as you want to get the best deal on the house you buy, you also want to get the best deal on your home loan. Every lender has different guidelines and interest rate options, which can have a big effect on your monthly payments. If you only get preapproved with one lender, you’re stuck with what it has to offer. When you get preapproved with multiple lenders, you can choose the offer that’s best for you.

Your lender will pull your credit reports during the preapproval process. This is known as a hard inquiry and will usually lower your credit scores by a few points.

If you’re shopping for a mortgage, you have a window of time where multiple inquiries are counted as a single inquiry for your credit scores. The window is typically 21 days — though it could be longer.

Since it’s difficult to know which credit-scoring model a lender will use, you’ll likely want to get all those rate quotes within 21 days.


Shop for homes during the pre-approval period
When you receive your preapproval letter, it’ll probably say it’s good for 30 to 90 days. Since that’s a relatively short period, you’ll probably want to wait to get preapproval letters until you’re 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. 


Our Preferred Lenders
If you’re thinking about buying a home in the near future, here are our picks for some mortgage lenders to consider that offer preapproval.  

Felicia Foster - Geneva Financial        

Phone: 214-377-0131

Email: ffoster@genevafi.com

Apply Here:  https://genevafi.com/felicia-key-foster 


Brad Boswell – Town Square Mortgage

Phone: (972) 333-3232

Email: bboswell@tsmlending.com

Apply Here:  https://www.tsmlending.com/brad-boswell/?lc=62 


Ed Andrews III- Cardinal Financial      

Phone: 682-429-3443

Email: ed.andrews@cardinalfinancial.com

Apply Here:   http://www.edandrewsiii.com/home32564706 


Lydia De La Luz - Supreme Lending (Bilingual)   

Phone:  (469) 620-7041 

Email: Lydia.DeLaLuz@SupremeLending.com

Apply Here:  https://www.supremelending.com/start/?lar=LydiaDeLaLuz


Scott Wells - First United Bank Mortgage Group (Specialize Physcian/Dentist)

Phone: 972-629-0893

Email: Scott.Wells@FirstUnitedBank.com

Apply Here: https://firstunitedteam.mymortgage-online.com/swells.html



Next steps
Getting preapproved for a mortgage provides many benefits to potential home buyers. It’s a straightforward process that requires some paperwork and, in many cases, just a few days for the lender to verify your personal and financial information.

Plus, going through the preapproval process could help alert you to potential problems that may prevent you from getting a mortgage. Each lender’s process is different, but they’ll generally review your credit history, income, assets and debts before granting a preapproval.

If you don’t get approved, you can start working on whatever the issues are. That may mean paying down debt to improve your debt-to-income ratio, saving for a larger down payment or resolving inaccuracies on your credit reports. Whatever it is, if you go through the preapproval process, you can take care of the issue before you begin your home search. If not, you could be in for an unpleasant surprise when you make an offer.

Remember, though, just because you’ve been preapproved for an amount doesn’t mean you have to borrow the maximum. In many cases, it’s probably a good idea that you don’t. That’s because many mortgage lenders use your gross (not net) monthly income as a factor in determining how much you qualify for. Your lender generally doesn’t consider your daily living expenses — things like groceries, utilities, childcare, healthcare or entertainment — in its calculations.


It’s up to you to review your budget to make sure the loan amount is one you’re comfortable with. Don’t rely on your lender to tell you what you can afford. Once that’s done, you may end up with a preapproval letter that’ll help you stand out from the home-buying crowd.


Have questions? Feel free to call Ashley at 817-797-9726!