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Pre-approvals generally last from at least 30 to 60 days, but the process might be completed in just one business day, a few days, or it could stretch out to several weeks. So, getting a view of the timing is key to making your dream home a reality, especially since the home-buying market moves fast and preparation means everything.
At Sire Finance, we guide you through every step with expertise and personal care. In this blog post, we will break down everything you need to know to stay ahead of the game and show you how to get it done.
What Is A Mortgage Preapproval?
By definition, a Mortgage Preapproval is a written commitment from a lender to a borrower that certifies the likelihood of loan approval for buying a property. It’s a big first step for homeownership as it boosts your financial strength to afford the property.
While it is not a guarantee, it demonstrates to the seller how serious and capable you are in buying the property.
When Should You Apply For Mortgage Preapproval?
Ideally, you should get preapproved before you start hunting for your dream home. This way, you have your clear budget on hand and a strong preapproval letter that you can use to negotiate smarter and confidently with the property seller.
This can also give you a clear vision of what you truly deserve based on your financial capabilities.
The Difference Between Preapproval And Prequalification
You might hear about prequalification and preapproval and be curious if they are synonymous and interchangeable; however, they differ in technicalities and in the advantages that they can give you.
Here are some key points that make them different from each other:
- Definition: A prequalification gives an estimate of the mortgage amount you might qualify for. In contrast, a pre-approval is more concrete. It confirms exactly how much mortgage you can receive and specifies the interest rate.
- Requirements: Prequalification involves the submission of unverified income or assets, or the borrower’s other data, to determine the mortgage amount for which the borrower may be eligible. This can be done without pulling out the borrower’s credit history report, which involves fewer steps than preapproval. On one hand, preapproval requires going through the complete mortgage application process with verified documents and a hard inquiry on one’s credit history to determine creditworthiness.
- Timeline: A prequalification can be done in a few minutes over the phone or over several days. A pre-approval may take at least 60 days.
How Long Is A Mortgage Preapproval Good For?
A preapproval’s validity ranges from 30 to 60 days. Typically, lenders require borrowers to get preapproved again after 90 days because financial situations can significantly change in a few months. Hence, it would be wise to refresh your documents and update your credit check from time to time.
What Is A Mortgage Preapproval Letter?
When you are preapproved for a mortgage, you will receive a Mortgage Preapproval Letter from your bank or lender. This letter shows that you qualify for a loan up to a certain amount for buying a property. This differs from a guarantee letter, but it demonstrates to the property seller that you are both serious and financially prepared to purchase the property.
How Many Preapproval Letters Should You Get?
Theoretically, having 2-3 preapprovals is a good idea for you to get the best rates and terms possible. Having the preapprovals in your hand means that you can shop around and select what property suits you the best. Having multiple pre-approvals will also help you save your credit score.
How Long Does It Take To Get Preapproved For A Mortgage?
Preapproval can be divided into various steps and may take time according to your chosen lender’s processes and terms. Based on your lender’s policy and your own financial standing, you can be preapproved within a few hours or weeks.
Your own speed in submitting the necessary documents and information greatly influences the time frame.
What Happens When a Preapproval Expires?
When preapprovals expire, reapplications are usually done. You can either reapply to your previously chosen lender or seek services from other lenders. You just need to submit your updated documents and required information for them to reassess your eligibility. Additionally, this usually takes less time than the initial pre-approval.
How Far in Advance Should I Get Pre-Approved for a Mortgage?
It is highly recommended that you get your preapproval 90 days before you look into different prospective properties. This way, you will have ample time for property hunting, negotiating with the seller, completing transactions, and eventually closing the deal. This also allows you to gauge your finances and budget according to the pre-approved mortgage amount.
Does a Pre-Approval Hurt Your Credit?
Unfortunately, yes– since preapproval triggers a hard inquiry that may negatively affect your credit score temporarily. On the bright side, the impact is typically small and short-lived, and multiple mortgage inquiries within a focused window count as just one and can only lower your credit score by a few points.
Why It’s Important to Act Quickly After Getting Preapproved
In today’s market, timing matters a lot. Acting quickly after getting your preapproval is important for keeping pace with fluctuating interest rates, home prices, and competition that can shift rapidly from time to time. You should work closely with your lender and move fast to lock in your dream house.
Secure Your Dream Home and Future with Sire Finance
To tie it all together, mortgage approval not only sets you apart but also readies you and boosts your confidence when the opportunity to buy your dream property comes your way. At Sire Finance, we believe that being prepared is the most powerful tactic that one should always keep in mind in today’s rapidly changing market.
Whether you’re considering mortgage preapproval for the first time or are reapplying for one, we are here to guide and assist you every step of the way so you can make your dream home a reality.
Ready to step into your future home? Contact Sire Finance today — and let’s open the door to your new future.
