Having a home loan pre-approved helps you know exactly how much money you will have to spend on a home. Being pre-approved for a mortgage will mean that you are officially eligible to borrow that amount of money from the bank based on your current circumstances (i.e. credit scores, income level, etc.).
The following are some basic FAQs about being pre-approved for a home loan and how to go about getting pre-approved for a loan to buy your home with:
Question: How long does a pre-approval for a mortgage last?
Answer: A pre-approval quote is generally good for 60-90 days after it is received. The pre-approval status can be updated at any time with the re-verification of some of the same documents from before as long as no information has changed. Pre-approval confirms that the prospective buyer has a source of income and the credit needed to get a mortgage out on a home.
Question: How long will I have to wait to get pre-approved for a mortgage?
Answer: Depending on the situation, a pre-approval can take a few hours, or a few days (if the borrower has a highly intricate file). A the time of pre-approval, we can provide a letter of approval. This letter is then presented to the lender before they commit to giving the prospective buyer a loan for that amount.
Question: Is it possible to be denied a mortgage loan even after being pre-approved?
Answer: Yes, it is possible to be denied a mortgage for the amount that you were pre-approved to take a loan out for. The idea is that after a lender pre-approves you for a loan you are actually able to get that loan, but that's not always easy to do. In fact, denial for the mortgage even after pre-approvals is one of the most common reasons why real estate deals fall through, especially if the information the client had presented changes.
Question: Do pre-approvals affect my credit score?
Answer: One quote for a pre-approved loan will likely not have any effect on your credit. More than one pre-approval for a mortgage you do not qualify for may have a negative impact on your credit.
Question: Can I get more than one pre-approval for a mortgage?
Answer: Sure, there is actually no limit on how many pre-approvals you can get for a mortgage. You should still consider that if a company is asking for any fee up front to process the information and give you a pre-approval rating, that company is probably not legitimate in the business. At that point, that is not a fee that is worth paying. Lenders really should not be asking for any payments for a pre-approval upfront. Having multiple lenders pull on your credit at the same time can damage your score.
Question: Can I qualify for loans if I have a lower credit score?
Answer: Yes, you will likely qualify for a loan with a credit score at around 620 or above, however, if you have a lower credit score you might be paying more interest to get that loan than someone with a higher credit score would have to pay. There are options for an approval with a sub-620 credit score as well.
These answers are just some of the basics for understanding if you qualify for a pre-approval rate. Credit scores, income, etc. play into qualifying for a pre-approval for a mortgage.
Remember, just because you qualify for a pre-approval means that there is no guarantee that you get a mortgage later on. Being pre-approved, but not qualifying for a mortgage is one of the top reasons that real estate deals fall through.
For more information on being pre-approved for a loan and on how to proceed to become eligible for a mortgage, please feel free to contact us.
We are a direct lender and a broker who will work one on one with you to exceed your expectations. If we don’t have a product that makes the most sense for you, we’ll find the lender that does. We’ll make sure you have the best loan at the best price. Choose Lend Smart- it’s the smarter way of doing business.