If you’re thinking about buying a home, getting preapproved for a mortgage is one of the smartest first steps you can take. A preapproval shows sellers that you’re serious and financially prepared, giving you an edge in a competitive market. Here’s what you need to know to get started.
1. Understand What Preapproval Means
A mortgage preapproval is a lender’s conditional offer to loan you a certain amount based on your finances. Unlike a quick prequalification, a preapproval involves a deeper review of your income, assets, credit history, and debts.
2. Check Your Credit
Your credit score is a key factor in determining the loan amount, interest rate, and terms you qualify for. Before applying, pull your credit report to:
- Check for errors and dispute any inaccuracies.
- Pay down credit card balances to lower your utilization ratio.
- Avoid opening new lines of credit before applying.
3. Gather Your Financial Documents
Lenders need to verify your financial stability. Prepare:
- Proof of income (recent pay stubs, W-2s, tax returns)
- Bank statements (to show assets and reserves)
- Identification (driver’s license, Social Security number)
- List of debts (credit cards, car loans, student loans)
Having these ready will speed up the process.
4. Choose the Right Lender
It pays to shop around. Compare interest rates, fees, and customer service from multiple lenders—including banks, credit unions, and mortgage brokers. A lender who takes the time to answer your questions can make the process much smoother.
5. Submit Your Application
Once you’ve chosen a lender, you’ll complete a mortgage application and authorize a credit check. The lender will review your documents, verify your employment, and evaluate your debt-to-income ratio.
6. Receive Your Preapproval Letter
If approved, you’ll receive a letter stating the loan amount you qualify for. This letter typically lasts 60–90 days and can be renewed if needed. Share it with your real estate agent so they can confidently make offers on your behalf.
7. Keep Your Finances Steady
After preapproval, avoid making big financial changes. Don’t open new credit accounts, make large purchases, or change jobs without consulting your lender—these could impact your final approval.
Bottom line: Getting preapproved is a critical step toward homeownership. It helps you understand your budget, strengthens your offers, and puts you one step closer to your dream home.
If you’re ready to start the preapproval process, our team at Advisors Mortgage is here to guide you every step of the way. Contact us today to get started.
By: Jon Iacono