As is the case with many things in life, seasonality can be a major factor, especially in real estate. Spring and summer are prime home-buying times, which means a considerable swell in home-buying competition. And the most successful buyers are often those who wade into this competitive fray armed with mortgage pre-approvals.
Couldn’t I just get pre-qualified for a mortgage?
Not if you want to enter the home-buying market with a competitive edge. Yes, pre-qualification can be a good first step, with a lender looking over some financial information and estimating a possible loan amount. Nice stuff to know if you’re not serious about house hunting. But pre-approval is a much bigger deal; a lender examines finances thoroughly and puts a conditional loan amount (and its terms) in writing. That’s the all-important pre-approval letter.
Why is a pre-approval letter so important?
The letter tells a buyer that you are serious, and that your financing is nearly in place, which can be crucial in a competitive housing market. Without pre-approval, a seller might worry that a would-be buyer can’t do the deal. Mortgage pre-approval helps the buyer in other ways, such as setting a budget. Knowing exactly how much home you can afford saves time and energy you might waste chasing down homes out of your price range. And if a bidding war erupts, which is a distinct possibility in today’s market, the bidder with an approval letter in hand has a clear advantage.
What does it take to get pre-approved for a mortgage?
Different lenders have different rules. And different loan products have different eligibility conditions. So there is no one set of criteria used to determine who gets pre-approved for a mortgage and for how much. But there are a few common considerations: credit scores, down payment amounts, debts, and stable income.
How long does mortgage pre-approval take?
Not long at all! Same-day approval is common. For people with complicated financial situations, the pre-approval process could take up to a week.
How long are pre-approval letters good for?
They’re typically valid for 60 to 90 days. After the pre-approval letter expires, you will need to go through the approval process again.
If you’re ready to get serious about competing in the home-buying market, our loan experts are ready to start the mortgage pre-approval process for you. Connect with us online or call us at (972) 591-3097.