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How to Get Preapproved

for a Mortgage & Why It Matters

You’ve been searching online for just the right home, cruising neighborhoods looking for the “that’s it!” house and picturing yourself on your shady new porch. You know there’s plenty to do before you get to the really serious house hunting, but it’s hard to resist.

Hang on, you’re almost there. You’ve got to have one thing in hand before the fun begins: your pre-approval letter. 

What is the difference between pre-qualification and pre-approval?

Mortgage terminology can be confusing. One important milestone to becoming a serious buyer is understanding the difference between being prequalified and preapproved.

Prequalifying means you’ve only filled out an application and had your credit pulled. It is only getting your foot in the door. Frankly, this won’t help much in your efforts to seal a handshake deal on a home.

On the other hand, a mortgage pre-approval takes the preliminary loan process a step further. Additional financial information is gathered. In some instances, you might be asked to provide many of the same documents that will be required to complete the actual loan process, including tax returns, bank statements and employment verification. With a pre-approval letter from us, real estate agents and sellers know you are a serious buyer.

This letter can be shown to sellers when bidding on a property. It proves that you already have backing and the ability to go through with the sale, which makes you a much more attractive buyer to sellers.

What documents will you need for a mortgage preapproval?

We mentioned you’ll need to provide some information when applying for pre-approval, to demonstrate your financial history and reliability. This will include:

  • Personal information such as your driver’s license, Social Security number, marital status, contact information and address
  • Recent statements from your bank accounts and any investment accounts (exactly how far back you’ll have to go depends on the lender)
  • Employment information, including where you have worked and for how long, as well as recent paycheck stubs and W-2 income tax forms for the last two years
  • Your overall financial condition, which includes all of your assets (stocks, 401(k), IRAs, bonds, cash) and all of your liabilities (any debts such as credit card debt, student loans, car loans)
  • Profit and loss statements if you are self-employed
  • Rental property income
  • Gift letters, if you are using a gift from a relative to help cover the down payment

Mortgage pre-approvals are not a guarantee


While a pre-approval is proof that we are willing to make you a loan, it is not an official commitment until you complete the full due diligence and application process. Other matters during the closing process can trip things up, including an appraisal of the home’s value and your ability to make a sufficient down payment. There may even be conditions listed on the preapproval that are contingent to receiving a loan.


Now can we shop?


OK, let’s say you’ve received that precious piece of paper. You’re in the game, practically packed and moving to your next address. A couple of quick reminders:


As I noted earlier, even a preapproval letter is not a guarantee. In fact, the underwriting department can’t issue a firm loan offer until a specific property has been identified. It’s likely you haven’t gotten quite that far yet.


We want to have some wiggle room in case your financial situation changes between the time you obtain the letter and when you actually find a home and complete the loan approval process.


That means it’s important to:


  • Keep your finances operating smoothly in the meantime.
  • Avoid opening any new credit accounts — for furniture or anything else you’ll be planning for your new address.
  • Keep existing lines of credit paid up and without substantial balance increases.


Having a pre-approval letter in hand is often required in order to place a bid. A loan pre-approval might not be a home run, but it will get you on base.