A: A mortgage pre-approval is when a lender gives their written commitment to a potential borrower. The mortgage pre-approval process is one in which a lender will obtain from the potential borrower their bank statements, tax returns for the past several years, verify their employment, and pull a tri-merge credit report.
Q: What is Pre-Qualification?
A: A mortgage pre-qualification can be best described as a prediction on the amount a buyer can borrow. The lender does not ask for verification, but only the answers to a few basic questions on income, employment history and monthly debt that will allow them to provide a rough estimate.
Q: During the home buying process when should I get pre-approved?
A: Pre-approval is the first step in the home buying process. It will let you know how much house you can afford and what type of mortgage will work for your unique financing situation. You should gain pre-approval BEFORE you start looking for a house.
Q: What if I get denied for pre-approval?
A: If you are denied for pre-approval it is NOT the end of the world. This is actually a great first step to get you where you need to be in order to qualify. And remember, if you made pre-approval your first step, you haven’t wasted any time.
Q: What would cause me to get denied for pre-approval?
A: The most common problem is that people do not know what their credit score is. Errors on your credit or delinquent payment history may also cause denial for pre-approval. Work to pay off bad debt and repair your credit to improve your score.
Q: When submitting an offer does it really matter if I’m pre-approved?
A: Yes! A seller will only accept an offer from a buyer that can prove they have funds. In a multiple offer situation a buyer that has pre-approval v/s a buyer that is only pre-qualified will likely win the bid.
Q: Does Pre-approval affect my time to close?
A: Yes! A pre-approved buyer will be able to close quicker than a buyer who is only pre-qualified.