A pre-approval is a way to be a step ahead when it comes to house hunting. It is a requirement for all homebuyers who plan to use a mortgage loan to finance their purchase.
What Does Pre-Approved Mean For A Mortgage
Not to be confused with a pre-qualification, a pre-approval is an in-depth verification process your lender will conduct to ensure you are a viable mortgage financing candidate. Your lender will have you fill out a loan application and ask you to upload additional documentation paper-trailing your financial history. After analyzing your finances, they will issue you a pre-approval letter for a mortgage loan up to a certain amount. This form is known as a pre-approval letter, and it can make your offers substantially stronger and more competitive, especially in hot markets.
How Long Does A Mortgage Pre-Approval Last
Pre-approvals remain valid forever as long as the primary criteria your lender used to pre-approve you stays the same.
The primary criteria include your:
- Debt Obligations
If any of those criteria change, you will need to contact your lender. Your lender will re-evaluate the impact the changes have on your qualification and possibly re-issue you a revised pre-approval letter.
If you have tight margins for any of the above criteria, some lenders like to re-evaluate the borrower’s pre-approval status every 90 days.
For example, if your credit score is close to a cut-off point for a particular type of financing, lenders may want to pull your credit scores again within the 90-day window to ensure that nothing has changed and your pre-approval can remain valid.
How Long Does It Take To Get Pre-Approved
If you have all of your documentation ready, getting pre-approved is easy, and completing your application can take as little as five minutes.
Most lenders require the same documentation to complete a pre-approval for a mortgage, although some lenders may need more information.
The necessary documents to complete a pre-approval include:
- At least two years of financial records
- Completed form 1099-S
- Copies of your federal tax returns
- Current banking records
During the pre-approval process, lenders will require documented proof of the buyer’s funds for their down payment and closing costs. The lender will need evidence of income, gifted funds, investment withdrawals, or any other activity within the account before completing your pre-approval.
You can significantly speed up their pre-approval process by having all of their documentation prepared for their lender.
What Are Mortgage Pre-Approvals Good For
There are four key reasons all buyers should get pre-approved, especially if they plan to buy in a hot real estate market.
- SELLERS CONSIDER YOUR OFFER MORE SERIOUSLY
Sellers are more willing to accept offers from pre-approved buyers. A mortgage pre-approval from a reputable mortgage lender, like JVM Lending, carries significant clout for sellers. Pre-approved offers have a higher probability of getting accepted.
- IT’S EASIER TO FIND A REAL ESTATE AGENT
Most real estate agents prefer to work with buyers who already have a mortgage pre-approval. Realtors recommend that every prospective buyer start the homebuying process by getting pre-approved. Pre-approvals show what loan options and property types buyers can qualify for and determine location and budget considerations.
- FOCUS HOME SEARCH AND BUDGET
Pre-approvals can help focus your house hunt immensely. Mortgage analysts provide valuable insight for buyers by explaining the cost-breakdown for future mortgage payments. Their advice can help narrow the home search to properties that best fit your budget and lifestyle.
- GREATER OPPORTUNITY FOR SUCCESS
Mortgage pre-approvals significantly improve your chances for success! Pre-approvals effectively guide your home search and increase the likelihood of sellers accepting your offer. With a pre-approval letter from a reputable lender, you are more likely to become a homeowner faster and with fewer roadblocks in the mortgage process.
This blog covers a few of the reasons why homeowners should get pre-approved before looking for a home. JVM Lending has made the pre-approval process quick, easy, and painless for all our buyers. To learn more about getting pre-approved, contact our expert team of mortgage analysts by phone at (855) 855-4491 or by email [email protected].