Will I get pre approved for a mortgage? If you check the internet today, this is one of mortgage frequently asked questions. Are you also wondering about this question? If yes, then you are in the right article. Follow this article to the very end to know things needed to get pre approved for a mortgage and if you can get pre approved.
Mortgage pre approval is an essential process in the home-buying journey. When you get pre-approved, it shows sellers that a lender has your backing and that you are very serious about buying a home. As long as you have the right document, you should have no problem in getting pre-approved.
Just so you know, the pre-approval process is based on your financial profile, your income, how much you have in your account, and your debt and investment status. Also, the lender will perform a hard credit inquiry as part of the process. And with this information, the lender will make an estimate on how much house you can afford.
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Why Should I Get Pre Approved for a Mortgage?
In today’s market, it will be very difficult to get a seller to consider you unless you have a mortgage pre-approval from a lender or you intend to pay all cash. There are so many buyers available for sellers to take a chance to talk to an individual who hasn’t gotten pre-approved.
Another reason why pre approved is very important is that it gives you an idea of how much you can borrow. This can help you save time during the house-buying journey.
How to Get Pre Approved for Mortgage
Getting pre approved for a mortgage is not a hard task. Let’s walk you through the steps you have to go through;
Choose your lender
The first step is to choose your lender to get pre approved from. It is advisable to shop around to find lenders with good rates and fees. Pre-qualifying from different lenders can be the best way to get good quotes. You can also choose to get pre approved by more than one lender. Just be ready to go through the process mutable times.
Document submission
Just like I have mentioned above, as long as you have the right document, getting pre approved for a mortgage should not be a problem. You need to submit documents about your income assets and debts. These documents include; W-2s from the last 2 years, pay stubs from the past 30 days, proof of income, Account statements, loan bills, court records, ID, contact info of landlords, and more.
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Credit Check
You will have to agree to a credit check to go through the process. Make sure you go through your credit report before your lender to avoid any error that will affect whether you will get pre approved or not. During the credit check, your lender will look at your credit history and report. In order to assess your credit utilization ratio or the credit you are using relative to your total credit limit.
The lower your credit utilization is, the more chances you have of getting pre approved. Also, remember that you need a credit score of at least 620 or higher to qualify. The higher your credit score is the lower your interest rate will be.
Pre-approval
Once the lender has gone through your financial and credit profile, he or she will make a determination whether to pre-approved you or not and for what amount. If you are pre-approved, you will be issued a pre-approval letter after a few days or weeks.
FAQs
What should I do if I cannot get pre approved?
So that you know, not everyone can go through the mortgage pre approval process. However, you can’t get pre approved; ask the lender why your application was denied. It is an issue you can remedy, make sure you solve it right away and seek the Mortgage pre approval again when it is settled.
If it is that your credit score is low or you have a huge debt that is preventing you from being pre-approved, you can work on those areas too. You can raise your credit score by making payments on time.
Some lenders have hard qualifying criteria, so another good option is to work with another flexible lender. If you are a member of a credit union or an account holder with a local bank, these institutions may want to work with you to get pre-approved.
How long does it take to get Mortgage pre approved?
Well, this depends on the lender you work with and whether you qualify for the pre-approval. You can get a pre approval within one business day. However, it usually takes a few days or weeks to receive. If you have to go through an income audit or other verifications, it can take longer.
Generally, if you have your documents in order and your finances and credit look good. It is possible to get pre approved quickly.
How long does a Mortgage Pre approval last?
Many Pre approvals are valid for 90 days. Also, some lenders will only authorize 60- or 30-days pre-approval. But if your pre approval expires, getting it renewed is very easy as the lender rechecks your finances and credit to make sure there are no changes to your situation is the last time you were pre-approved. However, keep in mind that it might count as a hard pull on your credit dropping your score by some points.
Do pre-approvals hurt credit scores?
No, inquiries for pre-approved offers do not affect or hurt your credit score. Only if you apply for credit can your credit score be hurt slightly. But there are ways in which you can improve your credit score if your credit was hurt.
Is Getting pre-approved the same as applying for a mortgage?
No, being pre-approved for a mortgage simply means you can creditworthiness to applying for a mortgage without having a purchase contract in place. Once your complete the application for a mortgage, the lender thoroughly checks through the application.
Can you get rejected for pre-approval?
If you are wondering, is it possible to be rejected even after pre-approval? The answer is Yes, your mortgage application can still be rejected even after pre-approval.
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