A good way to think about your pre approval is a guarantee from a lender that you can pay a certain amount for a home. You won’t really be able to make an offer on a home without a pre approval (unless you’re able to buy the home in cash), so it’s very helpful to have one on hand when you start touring homes. Since homes in some markets go from listing to sold in just days, if you find a perfect place you’ll want to be able to make an offer right away. A mortgage pre approval—and a good relationship with your loan officer, in advance—will help you do just that.
What do I need to get a pre approval letter for my home loan?
While getting a pre approval used to mean going to a bank and meeting with a loan officer, now the vast majority of people get their pre approval letter online. But not all online pre approvals are the same!
Some lenders offer a 5-minute online questionnaire, then offer something that might look like a pre-approval (they sometimes call it a pre-qualification or a rate quote), but what you get from this process isn’t very credible or useful when it comes time to make an offer on a home.
At Tomo Mortgage, we have a slightly more involved pre approval process, which we designed to help people who need to make a successful offer on a home. The good news is that it only takes most people 15-minutes to complete, and while we ask for your social security number, we only run a “soft credit check”—which won’t impact your credit score.
It’s a relatively simple process that asks:
- What and where you’re looking to buy
- Your personal information and information about any co-borrowers (and we’ll want to confirm your identity with government-issued ID)
- Your current income and assets (most people opt to connect their banking account information automatically, so this only takes a minute)
- Any debts or other financial obligations
- Your social security number (so that we can run a “soft credit check” that won’t impact your credit score)
Start your pre approval today!
How long does it take to get a pre approval?
While getting a pre approval takes a little longer then getting pre qualified (under 24 hours at Tomo Mortgage, or about 3 to 5 days at other lenders), it’s far more valuable and useful. You’ll usually want to talk with a pre-approval advisor or loan officer during this time, so that they can correct any information and ensure that you’re getting the best rate and offer possible.
What are unique cases that might make my pre approval take longer?
Some unique situations can slow down your pre approval process. For example, if you’re self-employed, lenders might need extra documentation like tax returns or a profit and loss statement, which can take time to gather and review.
Also, if your financial situation is complex—like if you have multiple income sources or recently changed jobs—lenders may need to do a deeper dive into your finances. Issues with your credit report, such as errors or disputes, can also cause delays as they need to be resolved before moving forward. Lastly, if you’re buying a unique property, like a fixer-upper or something unconventional, the lender might take longer to assess the risks involved.
When in the home buying process should I get a pre approval for a mortgage?
Best practice is to get your pre approval when you are ready to start home shopping. Your pre approval is valid for 120 days from when you receive your pre approval letter at Tomo Mortgage (this is almost double the industry average pre approval length which is 90 days) So it would be smart to get a pre approval once you are ready to dive into shopping for your property. If your 120 days expires, you can go back and get another pre approval, they are free!
What to do if my pre approval is denied?
If you’re denied a pre approval by one lender, don’t worry—another lender might still say yes. Each lender has different criteria and risk tolerances, so what one views as a deal-breaker, another might overlook. Lenders also offer various loan products with different requirements, and they might interpret your financial situation or credit score differently. Additionally, changes in your financial status or issues with the property might affect the decision. It’s a good idea to shop around and apply with multiple lenders to find one that’s a better fit for you.
The lender who denied your application should give you reasons for the denial. If you are denied, say for example, due to a low credit score, your lender should be able to give you suggestions to build your credit, so that you can reapply with a stronger application.
Can I buy a house that is more expensive than my pre approval amount?
Yes. Your pre approval is the amount your lender will loan you. Your down payment can make up the difference between your dream home’s cost and your pre approval amount.
For example, if you want to buy a home that is $445,000 and put 5% down, which would be around $22,500, your pre approval could be for as low as around $422,000, because your down payment covers the split.
If with your down payment considered, your dream home is still out of reach, you can request to get your pre approval amount raised from your lender, and if they are unable to, you can try shopping around for other lenders to see if you can get a higher loan offering.
Pre qualified vs. pre approved, is there a difference?
Oh, definitely! Pre qualification is the first step where you give the lender a rough idea of your financial situation. They’ll use that info to estimate how much you might be able to borrow. Pre approval, on the other hand, is a deeper dive. It involves verifying your financial details and credit score, giving you a firmer commitment from the lender.
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.
