Mortgage Pre-Approval: What It Is and Benefits

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Not sure where to begin in your homebuying journey? Have you considered getting pre-approved for a mortgage to better understand your financial situation and budget?

Getting pre-approved before you start shopping can save you time, effort, and frustration. But what exactly is mortgage pre-approval, you ask?

what is mortgage pre-approval?

Mortgage pre-approval is a process in which a lender evaluates your financial situation and credit history to determine how much you can borrow to purchase a home. After you’ve submitted your financial documents, such as your tax returns, bank statements, and W-2s, your lender will give you a pre-approved interest rate and loan amount.

The pre-approval process is a critical first step for anyone looking to buy a home. It can help you narrow down your search to properties that fit within your budget and help you move faster when you find the right home.

5 benefits of mortgage pre-approval

Still not sure if it’s worth it to get pre-approved before house shopping? Listed below are five advantages of getting pre-approved for a mortgage.

  • It can help you budget more accurately: Knowing how much you can borrow gives you realistic expectations, allowing you to narrow down your search to homes within your budget.
  • It makes you a more attractive buyer: Being pre-approved for a mortgage can make you a more attractive buyer to sellers and real estate agents, as it demonstrates that you are a serious and qualified buyer. This can help your offer stand out in a competitive housing market.
  • It can save you time: We understand that time is of the essence when you’re shopping for a home. The pre-approval process is quick and easy and can expedite the overall buying process. In fact, our online application takes just five minutes to complete, and 95% of our pre-approvals are issued within thirty minutes of submission. And then, when you are pre-approved, you can move quickly when the perfect home comes along, which is especially important in a fast-moving market.
  • It can give you more bargaining power: When you’re pre-approved, you have a clear understanding of your financial situation and how much you can afford to spend, which is a significant advantage when it comes to negotiating the purchase of a home. This can give you an edge over other buyers who are not pre-approved, as you are able to move forward with confidence and make a strong offer. “In most cases, if a seller has two equal offers on the table, with the only difference being that one buyer is preapproved, the seller will almost always choose the preapproved offer,” shared Jefferson Watters, a loan originator for AmeriSave Mortgage Corporation.
  • It can help you identify and address any potential issues early on: Going through the pre-approval process can help identify any potential issues with your credit or financial situation, which would be crucial to address before moving forward with a purchase. Paying down debts, saving for a larger down payment, or resolving inaccuracies on your credit report should all be taken care of before making an offer on a home.

the bottom line: your homebuying journey starts with getting pre-approved

Getting pre-approved for a mortgage is a crucial first step in the homebuying process. So why wait? Gather your financial documents, check your credit score, shop around for the best mortgage, and apply for pre-approval today.

And don’t forget to get a second opinion. You can complete multiple pre-approval applications with different lenders to see which ones will offer you the best interest rate and terms.

Don’t just dream of owning a home, make it a reality with a mortgage pre-approval.

Questions? Live chat with one of our loan consultants for personalized advice. Use our free mortgage and amortization calculators to calculate your monthly payment, including insurance, taxes, and interest.

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