If you’re in the market for a home, getting pre-approved for a mortgage loan is one of the best steps you can take. This gives you an estimate of how much money you can borrow and also demonstrates to potential sellers that you are serious about purchasing and financing your dream house.
How to Get Pre-Approved for a Mortgage Loan
If your credit score is good and you have a steady job, then getting approved should be easy. But if your credit is less-than ideal or there’s an income shortage, research lenders that fit within your financial circumstances.
When looking to purchase a home, the ideal time to get pre-approved is six months to one year prior. This gives you enough time to build up your credit and save up for a down payment.
Additionally, you must submit documents like tax returns, pay stubs and W-2 statements to your lender in order to prove your income and verify expenses.
Once you submit all necessary documents and pay any required application fee (if any), a lender will issue you with a preapproval letter. This document includes information such as loan amount, interest rate, and other specifics.
Typically, these letters are valid for 60 to 90 days; thus, it’s wise to obtain a new one after some time has elapsed. Doing this gives you time to update your documents and apply for preapproval with another lender if needed.
How to Get Pre-Approved Online
Most lenders allow you to complete your mortgage application on their website. This is the quickest and most convenient way of getting pre-approved for a mortgage, taking only 10-20 minutes. In some cases, lenders utilize automated systems which can process documents within three minutes or less.
Self-service preapprovals are fast and simple to complete, plus they’re available 24/7 at most major banks.
How to Get Pre-Approved with a Bank
The traditional way to get preapproved for a mortgage is an in-person meeting with a loan officer at your bank. These meetings are limited in time and additional follow-up meetings may be necessary.
Another option is to fill out a mortgage application online through the lender’s website, providing financial documentation such as W-2 statements, tax returns and pay stubs. Lenders usually review your data quickly and offer preapproval within a day or two after reviewing it.
If you’re a first-time homeowner, preapproval can help determine the price range for your new residence. Furthermore, it offers an ideal chance to shop around for mortgage lenders and compare interest rates, fees and other terms.
When looking for a mortgage, it’s wise to do your research as soon as possible and find the best rate and deal. Doing this can reduce your monthly payments and save you money over the life of your loan.