How to Get a Mortgage Pre-Approval

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What is a Mortgage Pre-Approval?

Getting a mortgage pre-approval from a broker or lender tells you how much you can borrow to purchase a home under certain conditions.

Morty can pre-approve you in minutes, provided you meet certain eligibility requirements. Simply input the property address you’re considering and confirm some details about it (such as whether it will be your primary residence or not and the type of home it is) to get your pre-approval letter.

Due to the validity timeline of the credit inquiry, your pre-approval offer with Morty will expire after 90 days, so this should be done anywhere from one to three months leading up to making an official offer.

Note that a mortgage pre-approval does not guarantee that you will automatically get a loan. You still have to wait for underwriting from a lender and an appraisal, among other things. You also might not receive the loan if your financial situation changes after pre-approval.

Why Should I Get Pre-Approved?

You should get a pre-approval because it helps you target homes in your price range and makes it easier for you to shop for a home. 

Sellers may also consider you a strong buyer. Having a pre-approval letter in hand offers flexibility when it comes to negotiating. If sellers know the sale will likely go through, they may even make some compromises, such as offering to pay your closing costs. 

Getting a pre-approval also allows you to sort out the bulk of the process ahead of time (you get part of the mortgage application out of the way early on) so you can focus on finding your dream home.

How to Get Pre-Approved for a Mortgage

Let’s go over the process of how to get pre-approved for a mortgage. 

First, your lender will evaluate your finances. They will need the following:

• Proof of income 
• Employment verification
• Proof of assets
• Credit check
• Social Security number
• Debt-to-income ratio (DTI), which shows how much debt you have relative to your income. Various types of loans require different DTI ratios. You generally need a 43% DTI to get a conventional loan, or a loan not backed by the federal government.

Your lender will also need the following documentation (though Morty doesn’t collect this information until after you request to lock your interest rate):

• W-2 statements
• Pay stubs
• Bank statements
• License
• Tax returns, if you’re self-employed

Your lender may require more or less information or documentation, depending on their requirements and your personal financial situation.

Pre-Approval vs. Pre-Qualification

Pre-approval and pre-qualification sound very similar but are actually very different definitions. To add to the confusion, some lenders even use these terms interchangeably.

Compared to pre-approval, you can think of pre-qualification as a less formal, less rigorous “check” on your assets. A lender might only ask you to simply report your assets in a pre-qualification. 

In contrast, they may go one step further and check your financial information and credit history during a pre-approval. 

Pre-Approval vs. Approval 

Again, pre-approval doesn’t mean that you’re a shoo-in for getting a loan. You still need final approval, which means your lender is willing to lend you the money to buy your home.

You’ll undergo conditional approval first. This is issued upon complete review of your initial submission to underwriting. Once your file is submitted, it’ll typically take two to five business days, depending on the lender. Morty aims for one to three business days in most purchase situations. The conditional approval will outline any additional documents or conditions the underwriter deems necessary to issue final approval. 

You’ll receive final approval once all the conditions from the conditional approval are met. This includes third-party items such as title, homeowners insurance and the appraisal. Final approval can take three to six weeks, depending on how long the third-party items take, your lender and anything that comes up in underwriting that requires more attention. 

Get Pre-Approval Ahead of Time

You want to go through the process of getting pre-approval. It’s one of those things, like checking interest rates, asking about mortgage insurance and interviewing the best real estate agents, that are particularly advantageous when buying a home. 

A pre-approval tells you how much house you can afford. A seller will also view you as a strong buyer if you can show that you have a pre-approval letter. 

Your lender will need a variety of information to pre-approve you, which can vary from proof of income to a hard credit pull.  

It’s important to know the differences between pre-qualification, pre-approval, conditional approval, and final approval, because these all represent important steps in the homebuying process. You can think of them as steps to get to the most important (and final) part of your home buying journey — closing your loan.

Ready to get a mortgage loan or thinking of refinancing your mortgage? Pre-approval for mortgage loans doesn’t have to be time-consuming. Get your pre-approval through Morty.

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