Why getting Pre-Approved Matters

Posted on March 19, 2021

If you’ve ever thought about buying a home or you’ve talked to a realtor before, they may have suggested getting pre-approved before you start shopping for homes. Why would getting pre-approved be helpful for you while house hunting? There are a number of reasons this can be beneficial to you. Some include standing out amongst other buyers, discovering and fixing credit report issues, making the house shopping process a little bit easier, and potentially closing your loan faster.

What is pre-approval?

Getting pre-approved means a lender has agreed to let the buyer borrow up to a certain amount for a home. To get pre-approved, a borrower needs to submit basic financial information and give access for their credit to be pulled by a lender. After you are pre-approved, you have between 90-120 days to find a home with that specific pre-approval letter.

Why should I get pre-approved early?

Sellers, especially in competitive markets, can get tons of offers on their home. An easy way for them to decide which offer to accept would be to look at the buyers who are already pre-approved. This tells them that they are serious about buying and they can actually afford to purchase the house. 

Not only will you stand out among other buyers, but you will also be able to find out about any potential issues before you go under contract like an error on your credit report. When you get pre-approved by a lender, they can look at your credit to see if you have any open collection accounts or other things that are hurting your score. Giving attention to and fixing these things can sometimes boost your credit score and help you qualify for a larger loan as well. 

After you are pre-approved, you will understand how much home you can afford and the other costs that you need to budget for. This can help narrow down your home search and make the home buying process easier and quicker. Because most of your information is already in your lender’s system, the rest of the loan process will be accelerated after you make an offer on your dream home.

Documents you need to get pre-approved

• Photo ID
• Pay stubs from the last 30 days
• W-2s from the last two year
• Tax returns from the last two years
• Bank statements  (all pages) don’t forget the front and the very back pages