Home shopping without a solid pre-approval is like taking a test without studying. Pre-approval gives you confidence in your ability to get a home loan before you start shopping. A pre-approval letter from a lender can make your real estate offer letter stand out because it shows the seller that you’re a serious buyer. Learn more about what it means to be pre-approved, the difference between mortgage pre-qualification vs. pre-approval and how to get pre-approved for a mortgage.
What does pre-approved mean?
To be pre-approved for a mortgage means you’re one step closer to homeownership. Pre-approval gives you direction on what homes you may be able to afford, as well as how much you should save for a down payment. Mortgage pre-approval involves submitting a mortgage loan application. Guild will then check your credit and look at your earnings, debts and savings to determine pre-approval.
When shopping for a home, it’s essential to work with a partner you can trust. Guild’s Credit Approval Protection* program gives buyers, agents and sellers added confidence in Guild’s pre-approval process. If Guild issued a preliminary underwriting credit approval and is then unable to close on the borrower’s loan, Guild will pay the borrower up to $1,000 for inspections, appraisals and relocation expenses incurred. Guild will also reimburse the borrower for their lost earnest money deposit, up to $5,000.
“Once it’s time to purchase the home, buyers can trust Guild to close their loan on time. If we can’t, we’ll cover some of their costs. This extra protection will help more people find the home they want and the right loan to help them get there,” says Mary Ann McGarry, CEO of Guild Mortgage.
What’s the difference between mortgage pre-qualification vs. pre-approval?
Although you may hear the two terms used interchangeably, there’s a difference between mortgage pre-qualification vs. pre-approval.
- Mortgage pre-qualification: An informal way to get a ballpark figure of how much you can afford to spend on a home. If you’re thinking about buying a home but are unsure if you’re financially ready, pre-qualification can be done quickly online. The Guild Mortgage pre-qualification calculator is a great place to start. First, gather your basic financial information, then enter your income and debt totals into the calculator. The results will estimate the home purchase price and loan amount that you can afford, along with the down payment amount that would be required.
- Mortgage pre-approval: A conditional written commitment from your mortgage lender with the maximum loan amount you’re pre-approved to borrow. The pre-approval process is more stringent than the pre-qualification process. When you’re ready to start home shopping and are seriously considering buying, it’s time to get pre-approved.
How long does it take to get pre-approved for a mortgage?
Your loan officer will provide a timeline and let you know the application requirements. To speed up the process, be sure to deliver complete financial documentation. It’s important to respond quickly to questions and requests for additional information during this stage. If you don’t provide the requested documents in a timely fashion, you may delay the pre-approval process.
When to get pre-approved for a mortgage
Before heading out with your realtor to view properties, you’ll likely have to provide a copy of your pre-approval letter. This letter helps limit your home search to homes within your means. Don’t wait until you’re ready to buy a home to get pre-approved. The earlier you begin the process the better, in case there are issues with your credit that need to be corrected.
How to improve your chances of getting pre-approved
Your credit score is one factor that determines if you’ll be pre-approved for a home loan and the maximum loan amount you’ll be pre-approved to borrow. If your credit score is affecting your ability to buy a home, there are steps you can take to help you build a stronger credit score over time. Improve your credit history by paying off debt, keeping balances low on credit cards, and making payments on time, every time.
From pre-approval to closing, I’m here to guide you through your homebuying journey. Contact me today.