How to Get a Mortgage Pre-Approval

Ready to start shopping for a home? One of your first steps is to apply for a mortgage pre-approval. Many sellers require a pre-approval letter before they'll accept an offer, and the process will give you a clear picture of your budget. 

Here's what you need to know about how to get a mortgage pre-approval. 

Mortgage pre-approval vs. pre-qualification

These two terms are often used interchangeably, but they are not the same thing. A pre-qualification is a quick estimate based on information you self-report to a lender. A hard inquiry isn't required, and the results are less reliable.

A pre-approval is more thorough. The lender verifies your income, employment, and assets, and runs a hard credit check. The result is a reliable approval amount and interest rate range.

What you need for pre-approval

To get pre-approved, gather the following documents:

• Recent pay stubs (30 days)
• W-2s and tax returns (last 2 years)
• Bank statements (last 2-3 months)
• Proof of identity
• Employment verification

How your credit affects pre-approval

Your credit score plays a major role in your pre-approval outcome. It affects whether you qualify, what loan types you're eligible for, and what interest rate you'll receive. Check your score before applying and use a mortgage calculator to estimate monthly payments at different rates. 

If your score needs improvement, focus on paying down credit utilization, making all payments on time, and disputing any errors before you apply. You may also want to get a pre-qualification first to gauge where you stand without triggering a hard inquiry.

How long does a pre-approval last?

Most pre-approval letters are valid for 60 to 90 days. If you haven't found a home within that window, you can request a renewal. Avoid major financial changes, like opening new credit accounts or taking on new debt, during this period, as they can affect your pre-approval status. 

Conclusion

Getting pre-approved puts you in the best position to buy a home. If you need to strengthen your credit before applying, tools like Kikoff can help you build a positive payment history. 

Build credit responsibly with Kikoff's plans.