However, pre-qualification is an estimate. The number found is based on a simple financial overview: it is not a guarantee. Lenders provide a general number for what you prequalify. This number is based off of your credit score, monthly debts and other details.
Less formal mortgage pre-qualification calculators exist online if you want to start there. Ease some of your stress and see how much you can truly afford. Although pre-approval has more authority than the less official estimate of pre-qualification, it can still give you a good idea of where you stand.
When should you get pre-approved?
The answer is simple. The best time to get pre-approved is before you begin the house hunting process. Some advice:
- Create a timeline first: Do not jump right in and apply for pre-approval without a timeline. Several factors contribute to the “when” of obtaining mortgage pre-approval.
- Know your timing: The process for searching for a home may take months. Make sure your pre-approval does not expire before your search ends. It may be best to begin the process right before your house hunt.
- Check your credit score: To have an idea of how a lender will respond to your application, check your score months before. Get your finances in order before pre-approval.
Why is a pre-approved borrower attractive to sellers?
It is important to get pre-approved before looking into a home because a pre-approved mortgage makes your offer stand out to sellers. Some agents may not work with you unless you are pre-approved. Agents and sellers will see that you are serious about buying a home. It also tells sellers that a bank has verified your information. Mortgage pre-approval is helpful when competing with other buyers and giving an offer.
Be sure to consider what you need to do before getting pre-approved for a mortgage. Get the documentation ready to go–the process is worth it in the long run! Pre-approval will bring you even closer to purchasing your dream home. Understanding your budget and appealing to sellers are benefits that make this an integral step in the home buying process.