What You’ll Learn
What pre-approval is and why it’s useful
How to plan ahead for the best pre-approval results
Things to consider before, during, and after pre-approval
Ready to take the plunge into homeownership (or just curious to see what your options are)? It’s an exciting time, and the more information you have going into it, the smoother the process will be.
That’s where pre-approval comes in. A mortgage pre-approval letter helps you build a budget and see how much house you can afford. It can also help you identify things you may need to fix in order to qualify for a loan, and legitimizes you in the eyes of sellers once you’re ready to make an offer.
Getting pre-approved is one of the best things you can do to go from home browser to home buyer. Here’s how it works and why every future homeowner should do it.
What to do before getting pre-approved for a mortgage
Before you even get pre-approved, it’s a good idea to get a sense of the homebuying process, how mortgages work, and what you can expect when you work with a lender. A home purchase is inherently complex, with up-front costs as well as recurring monthly costs you need to consider. So it’s good to go into the pre-approval process with a clear idea of what you can comfortably afford on a monthly basis, as well as up-front costs like your down payment and potential closing costs.
When to get pre-approved for a mortgage
When you get pre-approved, you’ll get a letter from the lender stating how much they estimate you’re qualified to borrow (keep in mind final amounts may change up or down when you go through the full underwriting process for the loan). These letters are typically good for 90 days from most lenders, so the best time to get pre-approved is when you think you might be making a purchase sometime in the next few months.
However, in most cases pre-approval only involves a soft credit check, which doesn’t harm your credit score—so even if you don’t plan to buy a home in the near future, it can be helpful to get pre-approved simply to see where you’re at and what you might need to do to prepare in the meantime. For example, if you’ve experienced financial hardship, this can give you clarity on what you need to work on.
How do you know if you’re ready to get pre-approved? Here are some general guidelines:
You are financially ready to handle a monthly mortgage payment
You've set aside some money for a down payment
You have a verifiable credit history
Best places to get pre-approved for a mortgage
There are a lot of options out there, and the best path to pre-approval for you may depend on your preferences and circ*mstances.
Many lenders still require in-person, face-to-face pre-approval. This can be good if you like those kinds of interactions, but there are also big downsides in terms of speed, convenience, and security.
If you prefer fast, accurate results from the convenience of your home, an online mortgage lender may be your best option. Keep in mind, however, that many lenders offer online pre-approval but will still need you to process much of the paperwork in person when it comes time to go through the full loan approval process. At Better Mortgage, our online pre-approval integrates seamlessly into our fully-digital mortgage underwriting and approval process, where you’ll be able to view, share, and sign documents entirely online all the way until closing.
Is it free to get pre-approved for a mortgage?
With most lenders, yes. But some lenders do charge an application fee, which can range anywhere from $300 to $400. At Better Mortgage, it’s always free.
What does the pre-approval process look like?
Pre-approval is the closest you can get to actually taking out a loan without firm commitments on either side (you’re not committing to borrow anything, and the lender isn’t committing fully to lending you anything—yet). So to get a pre-approval letter that sellers will take seriously, the lender needs to see enough details about your situation to make an accurate estimate of how much they’re able to offer you.
The process can vary slightly from lender to lender, but at Better Mortgage they’ll ask you to:
State your total household income
State the total assets you own
Provide your social security number for a soft credit check
This all happens through our secure online portal, and it takes as little as 3 minutes to complete and see your pre-approval letter.
Instant home loan pre-approval letter
If you’re actively shopping for homes, having a pre-approval letter in-hand can make all the difference in getting an offer accepted. With most lenders, it takes 1-3 business days from the time you submit your pre-approval application to receive your pre-approval letter. With Better Mortgage, you’ll see your pre-approval letter immediately upon submission, giving you the power to make a strong offer on that perfect home you just found before it slips away.
Should I get pre-approved with multiple lenders?
It’s usually a good idea to shop around and get a sense of what different lenders are willing to offer you. When doing so, just keep in mind that some lenders may charge an application fee. You’ll also want to ensure the lenders you’re looking at are only doing a soft credit check (like Better Mortgage does), not a “hard” one—hard credit checks do impact your credit, so it’s best to reserve those for when you’re ready to make a commitment.
What happens after I get pre-approved?
This is where the fun begins! With your pre-approval letter in-hand, you can house-hunt with clarity since you’ll have an accurate picture of your price range. And once you find the right one, you can submit an offer with confidence. With your pre-approval letter in hand, the seller will see that you’re able to borrow the necessary money for the purchase.
When you get pre-approved with Better Mortgage, it’s easy to continue the process through our fully-online mortgage application engine. Once you’ve made an offer and the seller has accepted it, you’ll begin the process of getting fully approved for the loan. Because our process is online and highly efficient, you can close up to 10 days faster, on average, than the industry average*.
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