Purchasing a Home

Pre-qualification vs Pre-approval

A pre-qualification for a mortgage is the first step you’ll take in the pre-approval process. Your lender will review your income, debt and assets to give you a good idea for how much you can qualify for with a mortgage. But just because you can qualify for a mortgage amount doesn’t mean that’s the best way to set your budget.

A pre-approval for a mortgage is much stronger, because this is when the lender will look at your credit and ask you to submit more documentation so they can give you a more accurate view of how much your interest rate could be and the specific amount that you can take out for a mortgage. This will come in writing and can be used as leverage so the real estate agents and sellers will see you as a serious buyer. Usually pre-approval letters are good for 60 to 90 days. 

How to Get Pre-Approved for a Mortgage

The mortgage pre-approval process is like applying for a mortgage in that you’ll need to provide many of the same documents. Typically, you’ll need this information to get pre-approved for a home loan:

• Last two years of W-2s and tax returns
• Last three months of pay stubs
• Bank account statements
• Signed authorization to pull your credit

Once you send these documents to your lender, they will submit the information to the underwriter to review. If you qualify, they will issue you a pre-approval letter, which will outline the amount that you’re pre-approved for and any conditions that must be met.

Getting pre-approved for a home loan is an important step in the homebuying process.