How to Get a Mortgage Our Mortgage Guide for Home Buyers
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If the difference is small, you may be approved for a larger mortgage when it comes time to apply for an actual mortgage. A preapproval letter includes your name, the price of the home you gave when requesting the preapproval, the loan amount you’re preapproved for and the expiration date of the preapproval. After you find the right home and make an accepted offer, it’s time to officially apply for a mortgage. Even with preapproval, the process may take several weeks, as the lender thoroughly checks you out and the home as well, conducting an appraisal to determine its fair market value. Preapproval letters are valid for a specific period such as 60 or 90 days, so it helps to have a timeline for finding a home. Don’t wait too long after receiving your preapproval to go house-hunting.
Different lenders assign different times for which their letters of pre-qualification or pre-approval are good, from 30 to as many as 120 days. Low- and no-documentation loans are called Alt-A mortgages; they fall between prime and subprime loans in terms of interest rates. U.S. Department of Veterans Affairs loans, which typically require no down payment, are for U.S. veterans, service members, and eligible spouses. A property appraisal determines the property’s value, which might be lower or higher than the seller’s asking price. The specific loan product for which you’re applying; the loan amount; terms, such as length of time to repay the loan ; and the interest rate.
How long does a preapproval last?
Getting pre-approved lowers a buyer’s credit score by about five points temporarily. Credit scores range up to 850, so a five-point change is negligible. Getting pre-approved early is an advantage because one-third of mortgage applications contain an error. These errors can negatively affect your interest rate and ability to buy a home. Pre-approvals uncover those mistakes and give you time to fix them.
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Take the first step and get prequalified.
The three major credit bureaus consider a prequalification a soft inquiry, which means it won’t hurt your score in any way. To prepare for a preapproval, gather your documents early and submit these to a mortgage lender in a timely manner. Otherwise, the prospective buyer would have to apply for a mortgage before making an offer and potentially lose the opportunity to bid on a home.
Inquiries within this time frame will be counted as one inquiry instead of multiple ones. House-hunting with a preapproval letter provides a tool to show you are serious about purchasing a home, and financially equipped to do so. In general, if you have your paperwork in order and your credit and finances look good, it’s possible to get a preapproval quickly. While a fast pre-approval is important, it's also important to ensure you're getting a good deal. It pays to shop around for a lower interest rate - especially if you're searching well in advance. Fill out the form below to get instantly matched with licensed local lenders in your area.
The Bottom Line: Start Your Home Buying Journey With A Mortgage Preapproval
If a additional mortgage pushes your debt-to-income ratios too high — above 28 percent and higher than 36 percent — lenders might not approve the second loan. If your debt-to-income ratios remain below these levels with a new loan, most lenders will approve your request. This requirement basically asks, “Is your income enough to cover the new mortgage payment and all your other monthly expenses? Most lenders want your debt-to-income ratio to be 36% or less, but the ratio that works best for you is the one that you can comfortably afford.
Another way to get pre-approved is to complete a mortgage application online via a mortgage lender website, and financial documentation including W-2 statements, tax returns, and pay stubs. If you are a home buyer seeking a mortgage, all that’s required to receive a pre-approval letter is to choose a lender, confirm eligibility and submit your application details and documents. It may take up to 10 days to get pre-approval once you provide proof of identification, income, assets and debts. While this may cause your credit score to drop slightly, getting preapproved won’t hurt your credit in a significant way. Subsequent inquiries from other mortgage lenders within the same time period won’t affect your score at all. And best of all, Rocket Mortgage usually only requires a soft pull at this point in your mortgage journey, and soft pulls have no effect on credit.
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Knowing how much mortgage you can expect to take out is also highly beneficial to you as a home buyer, and it can help you narrow down and focus on your best options. Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy.
Please review its terms, privacy and security policies to see how they apply to you. Chase isn’t responsible for (and doesn't provide) any products, services or content at this third-party site or app, except for products and services that explicitly carry the Chase name. Expired pre-approvals can be renewed online or in person at any time. As a home buyer, pre-approvals are for your benefit, so it’s never too early to get one. The difference between a pre-approval and pre-qualification is that mortgage pre-approvals get used to buy a home – pre-approval cannot. Each post is edited and fact-checked by industry experts to ensure that we are providing accurate information for our readers.
Getting pre-approved for a loan is important, and different from getting pre-qualified. To get a clearer view of the mortgage process, it’s helpful to know some of the factors that will be considered when your mortgage application is reviewed. Whether you choose to get prequalified or preapproved, you will have a better sense of whats in your price range and can hunt for a house with confidence. When you want to talk to a lender to establish a general range of home prices, you can get prequalified, which is simply a lenders estimate of what you could potentially borrow. If you can make a down payment of at least 20% of the total purchase price, you may be approved for a higher loan amount.
Some loan types may require less of a down payment, such as only a 3% to 5%. Federal Housing Administration loans require a 3.5% down payment, while the U.S. Department of Veterans Affairs loans may not require any money down. This is different from a pre-qualification, which is only a loan estimate and not a firm offer of credit.
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