In today’s competitive real estate market, pre-approvals are more crucial than ever. Before you get started with the home buying process, it’s essential to understand the basics of a mortgage pre-approval and how long they will last. Typically, a pre-approval is good for about 60-90 days.
What is a Mortgage Pre-Approval?
A mortgage pre-approval determines your purchasing power and states how much you can borrow based upon your provided financial information.
Mortgage Pre-Approval vs. Pre-Qualification
A pre-approval is a written commitment from a mortgage company stating how much you will qualify for and how much house you can afford. A pre-approval is issued after an underwriter reviews your documents, so it may indicate conditions that must be satisfied to ensure the commitment is binding.
A pre-qualification is a simple, non-binding letter drawn up by a mortgage specialist stating that they have reviewed your financial information. A pre-qualification only provides an estimated or approximate loan amount and is not an official commitment.
What are the Requirements for a Pre-Approval?
The first step to getting pre-approved is submitting a mortgage application. From there, you will submit the following documents for review:
- Last two years of Federal Tax Returns (personal & business)
- Last two years W-2 statements
- Two most recent pay stubs
- Two most recent months bank/brokerage statements
- Copy of ID’s
After you provide the proper documentation, the mortgage company will check your credit. This will give the lender a better understanding of how well you have handled debt in the past.
Why is a Pre-Approval Letter Important?
Having a mortgage pre-approval makes you a more competitive buyer, growing increasingly important in today’s real estate market filled with bidding wars. Getting pre-approved shows the real estate agent and seller that you are a serious buyer and may have a better opportunity to secure financing for the home than other buyers.
How Long Does a Mortgage Pre-Approval Take?
GuardHill can offer same-day pre-approvals. However, the timeline may depend on how long it takes you to gather and submit your documents for review. The faster you can provide all the necessary information, the faster the mortgage company can review your credit profile!
How Long is a Mortgage Pre-Approval Good for?
Mortgage pre-approvals are typically good for about 60-90 days. A pre-approval has a time frame because the mortgage company bases it on your most recent financial information.
What Happens if my Pre-Approval Expires?
If you are still searching for a property after that 60 or 90 day period, you should get in touch with your mortgage company to get an updated pre-approval letter. You may have to provide updated pay stubs, bank statements, or credit information.
Summary of the Pre-Approval Process
Overall, a mortgage pre-approval will make you a more attractive buyer in today’s competitive market. A pre-approval will help you determine your budget and narrow down your home search, so you avoid wasting time looking at properties you cannot afford. Contact us to get started on your pre-approval and home buying journey!