What is a Mortgage Pre-Approval?
A Pre-Approval is usually a letter from a lender stating that lender's preliminary decision that a borrower would qualify for a particular loan amount under that lenders guidelines. The determination and loan amount are based on income and credit information. Most pre-approval letters are good for 60 to 90 days.
Does Pre-Approval Guarantee a Loan?
No. Pre-approval letters are subject to modification or cancellation if your financial situation or other conditions change. Regardless of pre-approval, a lender may require additional income and asset verification, as well as the satisfaction of other conditions, before extending a loan.
Why Should You Get Pre-Approved?
There are many reasons you should get pre-approved. The most important reason is that you will get an accurate idea of how much home you can afford. This can help you to target your home search and ensure you only look at houses that are truly in your price range. A pre-approval letter also helps you prove to real estate agents and sellers that you are a credible buyer and able to act fast when you find the home you want to buy. A pre-approval letter can make you stand out in a competitive real estate market. If you make an offer on a house without a pre-approval, your offer may not be taken as seriously as an offer from another person with a pre-approval.