Mortgage Pre-Approval: Making It Official
Mortgage pre-approval involves the same steps as a mortgage application - you'll provide detailed information about your income and assets that will be reviewed by the lender's underwriters. If approved, you'll get a commitment by the lender for a specific loan amount. (When you apply for a mortgage, you're applying for credit to purchase a specific property as well.)
Pre-approval shows you have the resources to make the purchase and it helps you act quickly when you find the perfect home. From the sellers' point of view, a pre-approved buyer is more attractive than someone who says they can buy a house but have nothing but their word to back up their offer. By proving you have your bank's backing, a mortgage pre-approval can help you negotiate on price - and it can be a deciding factor for sellers who receive multiple bids.
One note on timing: Don't apply for a pre-approval until you're fairly certain you'll want to buy a home within the next 90 days. Unlike getting prequalified, a pre-approval involves requesting a copy of your credit history and an examination of your application information and the documents you provide. A pre-approval will show as an inquiry on your credit report, and it's only good for a certain amount of time.
If you decide to proceed with the loan, you may also be required to pay an application fee and prepay for the home appraisal and other costs. An estimate of costs or fees to be paid at the mortgage closing will also be determined at this stage.
To get pre-approved, you'll need to provide some personal information and financial documents, including detailed proof of your income for the past two years. You can start your mortgage application by contacting a mortgage loan originator today.