We'll guide you through the mortgage application process to get you into your new home.
Getting pre-appoved tells realtors and seller that you're
serious about buying
Crunch the numbers to see what your monthly payment could look like or how much you may be able to borrow
When you start searching for your new home, a big part of finding the right place boils down to budget. You’ve got to balance the details you’re dreaming of with what fits your finances, and that’s where mortgage pre-approval comes in. Getting that initial green light from lenders not only gives you a good handle on what you can afford, but it can also help you stand out to sellers. Let’s dive in
First things first, what does mortgage pre-approval actually mean? It’s a letter from lenders that tentatively tells you how much money they’ll let you borrow. And while it’s not a guarantee, it shows sellers and real estate developers/agents that you’re serious about buying a home. That stamp of approval helps your offer shine and can give you the edge you need to beat out other homeowners-to-be.
Now, let’s move on to how to get a mortgage pre-approval. Here’s a quick guide to help make it happen.
You’re going to want to know this number before you apply for pre-approval. It shows lenders how reliable you are and plays a big part in what your loan terms will look like. Remember, you’re hoping for a high number here. If your credit score is over 700, you’re in pretty good shape.
The next step is to round up your credit report. Lenders take a look at this to see how you’ve managed money in the past, so they’ll be checking out whether you pay on time, if you have debts and how long you’ve been using credit. Be sure to go over everything with a fine-tooth comb. If something seems out of place, you’ll want to sort it out sooner rather than later to put a stop to any snags.
Now it’s time to figure out your debt-to-income ratio. Your DTI is a simple way to show how much money you owe each month compared to how much you make. To find it, you’ll add up your monthly debts, like credit card payments, and divide them by your gross monthly income. Lenders love lower ratios—think 60% or less. If your DTI is running higher, bring it down by boosting your income or paying off as much debt as you can
To get pre-approval for a home loan, you’re going to need to gather up documents so lenders can make sure all your information checks out. Go ahead and grab your:
Now that you’ve got your paperwork squared away, you’re ready to reach out to your lender to go through the pre-approval process for your mortgage.
Be sure to confirm with the lender that you want a mortgage pre-approval and not a pre-qualification. A pre-approval comes with a loan commitment, and you’ll have the peace of mind knowing an underwriter has reviewed your loan request. A Pre-qualification is based on verbal information you provide and does not have the level of underwriting that a pre-approval does. This also helps boost your buying leverage and gives you an edge over other buyers who don’t have a firm pre-approval commitment.
Speak to your Paisa Express Advisor about getting pre-approved with your preferred banker for Pre-Approval a firm commitment to lend.
| Aspect | Pre-qualification | Pre-approval |
|---|---|---|
Definition |
An initial evaluation of your creditworthiness based on self-reported financial data. |
A more thorough assessment involving an actual application and detailed verification of your finances. |
Process |
Quick and based mostly on the information you provide. |
Involves a formal application and credit check. |
Documents Required |
None or very basic financial information. |
Detailed financial documents such as W-2 forms, tax returns, bank statements, etc. |
Time Taken |
Usually fast, can be done over the phone or online. |
Takes longer due to the detailed scrutiny of financial documents. |
Result |
An estimate of how much you might be able to borrow. |
A specific loan amount that you are likely to be approved for. |
Credibility |
Less credible, as it does not involve a detailed analysis or credit check. |
More credible, often required by sellers to make an offer on a home. |
Validity |
Generally valid for a short period, often a few months. |
Typically has a set expiration date, usually 60 to 90 days after issuance. |
It’s a good idea to start the pre-approval process early on in your home buying journey—around a few weeks or months before you start making offers. That gives you a chance to iron out any wrinkles in your credit history and gives you time to apply for pre-approval.
One thing to watch out for? Pre-approval for a mortgage doesn’t last forever. Your letter is typically good for about 90 to 180 days, which means you only want to get pre-approved if you’re serious about your search.
If buying a new home takes longer than you thought, you can get your updated documents back together and go through the process again. As a silver lining, your lender will already have most of your info on file.
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