Strap in! Before you kick off your house hunt, there’s one essential document you absolutely need: the pre approval letter. What is it, and why should you care? Let’s break it down!
What exactly is a pre approval letter?
Imagine this: you stroll into a bank or lender, and they dive into your financials—credit score, income, debt, the whole picture. After their thorough analysis, you either get a thumbs-up (or a “not quite yet” if your finances need a little TLC). That thumbs-up? It’s your pre approval letter. It screams to sellers, “Hey, I’m a serious buyer, and I’ve got the financial backing to prove it!” It will detail how much the lender is willing to lend to you, (how much debt they believe you can reasonably afford to take on). Your lender wants to protect you from biting off more than you can chew, and ending up in a situation like a foreclosure which would seriously impact your ability to get a mortgage in the future.
Why do you need one?
- Sets your budget
Without a pre approval letter, you’re basically blindfolded, taking shots in the dark. This letter gives you a clear budget, sharpening your focus on what you can realistically afford. - Strengthens your offer
Sellers love a solid pre approval letter. It shows you’re not just browsing—you’re ready to buy. In a hot market, this could be the difference between snagging your dream home and watching someone else put up the “sold” sign. - Speeds up the closing process
Having your finances in check speeds up closing. Sellers want assurance that you won’t get cold feet or hit financing roadblocks. A pre approval letter tells them you’re all in and can make an offer asap.
How do you get one?
Step 1: Choose your lender
Shop around! Not all lenders are created equal. While some lenders don’t take the time necessary to prepare a strong pre approval and offer letter, this is critical to making a successful offer on a new home. Here at Tomo Mortgage, our online pre approval only takes 15 minutes, and it includes a soft credit check—but way more reliable when you’re making an offer on a home.
Step 2: Submit your financials
Get ready to share your financial documents—tax returns, pay stubs, bank statements, and any debt details. The more transparent you are, the smoother this process will go.
Step 3: Get approved!
Once the lender reviews your info, they’ll tell you how much you can borrow. If everything checks out, you’ll receive your pre approval letter!
How long does it last?
Typically, a pre approval letter is valid for about 60 to 90 days. If you haven’t found your dream home in that timeframe, no worries! Just check in with your lender to update your financials and score a fresh letter. If you choose to go with us at Tomo Mortgage you’re in luck! Our pre approval letter is good for 120 days, giving you an extra month of home searching before you’d need to reapply.
Does getting pre approved hurt my credit?
Not if you’re smart! When lenders pull your credit for pre approval, it can be a hard credit check, where you will see a temporary dip in your score, or a soft credit check, meaning your score won’t take a hit. We offer a verified pre approval with a soft credit check, so your credit won’t take a ding, but you can walk into any open house ready to make a strong offer.
Can I be denied after getting pre approved?
Unfortunately, yes. Pre approval is based on your financial situation at that moment. If your circumstances change—like losing a job or piling on more debt—you might face denial when it’s time to finalize your mortgage.
Do I have to stick with the same lender after getting pre approved?
Nope! Your pre approval letter doesn’t lock you into a specific lender. Feel free to shop around for better rates and terms until you find the perfect fit. Our rates are typically 0.48 points lower than the average mortgage lender in America. See if we can save you money.
If you’re ready to start your journey to homeownership, get pre approved with Tomo Mortgage today.