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Three Reasons to Get Pre-Approved for a Mortgage

Serious homebuyers should consider starting the homebuying process in the office of a loan officer rather than a real estate agent. Potential home buyers benefit in a variety of ways by obtaining a letter of pre-approval before finding a home, including a feeling of confidence when you’re ready to bid on your dream home.

A pre-approval is when a lending institution tentatively commits to lend a borrower, upon underwriting review, a fixed loan amount. The pre-approval is based on proof of income, proof of assets, credit reports and debt. Pre-approval does not guarantee a loan until the property has been inspected and the underwriting process is carried out. It is, however, a strong indication that a borrower’s loan will be approved if all the appropriate actions are taken.

Here are some of the benefits of pre-approval:

  1. Weed out issues early on. During the pre-approval process, lenders can detect any potential problems that might make it difficult for you to obtain a loan. The sooner you detect these problems, the better.
  2. A pre-approval letter helps define your search. After the pre-approval process, you’ll know exactly what you can afford. This makes the home shopping process more efficient, and you won’t waste time with listings out of your price range. You will also save yourself from the heartbreak of falling in love with a home you can afford.
  3. You’ll have more leverage in negotiations with the seller. Having a pre-approval letter makes your offer look good to the seller. They will have fewer reasons to worry that you will be turned down for the loan during the underwriting process. It is less risky for the seller to accept your offer than another offer that is not pre-approved. This can be very beneficial when a seller receives multiple offers.

Required items:

For a Credit Report:  
Full name, social, date of birth and current address

For Income Review:  
Most recent paystubs, retirement/social security  documents, and W2s/1099s from the past two years

For Asset Review:  
Most recent two months of bank statements, or confirmation for the source of assets at closing 

Get pre-approved is quick and easy, and will save you a lot of time in the long run. If you are pre-approved, it’s important to remember that the pre-approval is based on certain conditions. Before closing on a loan, a lending institution will always reevaluate your financial situation with a recent copy of your credit history and other information.

You should not take out any credit after obtaining a pre-approval such as a car loan or credit card. This will affect your credit score negatively and might lead you unable to close on the mortgage or increase your interest rate.

After knocking out the pre-approval process, you can enjoy the home shopping process with confidence!


The information contained herein (including but not limited to any description of lending programs and products, eligibility criteria, interest rates, fees and all other loan terms) is subject to change without notice. This is not a commitment to lend.

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