Discover 7 Mortgage Pre-Approval Tips For First-Time Home Buyers

If you are a first time home buyer and need mortgage, discover our mortgage pre-approval tips to get one.

1. It’s Not The Same As Getting Pre-Qualified

Mortgage Pre-Approval

When you get pre-qualified, your lender will estimate how much you can borrow based on the financial information you supply them with. They can give you an idea of what kind of mortgage you can apply for, but they won’t actually verify your information.

When you get pre-approved, the lender is typically ready to make you a loan once they verify your information, after which you can complete an official mortgage application. The letter says that once you submit the necessary documents and make an offer on a home, your loan will be approved.

2. It Should Be One Of The First Things You Do

Things to do - Mortgage Pre-Approval

Before you fall in love with your dream home, you should probably find out if you can actually afford it. Pre-approval takes the guesswork out of searching for homes when it comes to your budget since you’ll receive, in writing, the exact loan amount available to you.

3. Home Sellers Expect It

Home Sellers - Mortgage Pre-Approval

Getting pre-approved will not only help you discover the maximum that you can borrow, but it will also help sellers take you more seriously in a competitive market. Sellers will be more likely to negotiate a sale with you if you prove to them that your finances are already in place.

4. You Need To Check Your Credit

Credit - Mortgage Pre-Approval
Source: Flickr user Simon Cunningham

Since you’ll need to provide this information to your lender, it’s a good idea to check your credit score and report prior to your pre-approval appointment. The scores will help your lender provide you with the different kinds of loans available to you.

5. Gather Necessary Financial Information

Financial Information - Mortgage Pre-Approval
Source: Flickr user Adam Rifkin

There are quite a few documents you’re going to have to bring with you to your pre-approval appointment for your lender to verify:

W-2 forms (from the past two years)
pay stubs
bank account statements
investment account statements
tax returns
other sources of income (side job, bonuses, etc.)

In addition to your financial information, your lender will also need personal information like your driver’s license and social security number, so be sure to bring those along, too.

6. Sort Out Any Remaining Conditions

Conditions - Mortgage Pre-Approval

Once you have all the information you need, the underwriting system should deliver your pre-approval letter in a matter of minutes with one of four conditions: approved, approved with conditions, suspended, or denied.

If there are more conditions that still need to be met, it probably means that there’s some missing information that they need in order to complete the process. If it’s denied, it might mean that your financial situation isn’t currently sufficient enough to take on a home loan, or maybe you need to work on your credit score.

It’s okay if you have a bit more work to do before getting the letter in hand—your lender will be able to provide you with some advice to help you meet any existing conditions.

7. The Letter Isn’t Valid Forever

Letter - Mortgage Pre-Approval

Things change, including your financial situation. A typical pre-approval letter will only be valid for 60-90 days after getting it, but since the time frame varies, be sure to ask your lender about it when you apply.