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Mortgage Pre-Approval: Everything You Need to Know

July 5, 2024 — 2 min read

You’ve chosen the ideal neighborhood, picked out (what you think is) the perfect house, and now you want to make an offer.

How do you know if you can afford it?
How do you know if your lender will approve a mortgage for the house?

With a mortgage pre-approval you can identify exactly how much house you can afford—and show the sellers you’re serious. According to Zillow, 86% of home sellers surveyed prefer a buyer who has a pre-approval in hand for a mortgage.

But what is it, exactly? What are the benefits, and how do you get pre-approved for a mortgage?

Here’s our guide to everything you need to know about mortgage pre-approval.

What is Mortgage Pre-Approval?

Mortgage pre-approval is the process you go through with a lender to determine how much money you can borrow to buy a home.


Mortgage pre-approval and mortgage pre-qualification are not the same thing. Both can be applied for online, and both give an idea of “how much house you can afford.” But pre-qualification doesn’t have a lender pull your credit, and the financial information you’re providing is far less detailed. Therefore, pre-qualification is only an estimate. Depending on your interest rate, loan type, and your actual loan approval, the amount may change when more details from your finances come in.


For pre-approval, lenders look at all the details. Bank statements, pay stubs, and a hard credit check all come through for your lender to see the full financial picture of your debt and your credit score to determine how much more debt you can reasonably take on with a mortgage.

Benefits of Mortgage Pre-Approval

There are a number of reasons why obtaining a mortgage pre-approval is in your best interest as a buyer.


First of all, knowing how much house you can reasonably afford puts you in a better position for your search. You understand your limit, and you know what your mortgage payments may look like. Knowing and understanding what’s in the budget (and what’s out) can narrow your search and keep you realistic with your realtor. It will save you time and heartache.


The thing a seller most likely wants from a buyer is an offer above asking price. But they especially want an offer that won’t fall through. Having a pre-approval in hand is the best way to show you’re serious about the purchase, and you have the money (through a lender) to back up your offer. Besides offering above asking price, a pre-approval is a fantastic way to have a competitive offer that gets accepted.

RELATED: The Power of Pre-Approval


If the seller wants a shorter escrow (or you do) you can get to closing faster if you have a pre-approval, since you’ve essentially done much of the mortgage approval process ahead of time. Your lender has your financial documents, they’ll just need to make smaller updates to get you approved.

RELATED: Understanding Closing Costs

Steps to Get Pre-Approved for a Mortgage

Your income, your assets, and your credit score all come together to show your lender which loans you could be approved for and how much you can borrow. The state of your financials and credit will also impact the interest rate offered to you. Now, how to get pre-approved:


Your mortgage pre-approval will require financial documents and other items to show your debt-to-income ratio—so gather them from your emails and your files. Your lender will need to check your:

  • Income

  • Employment

  • Credit history

  • Proof of assets

  • Identity

To verify the above, you’ll be asked to provide the following documents:

  • Tax returns

  • W-2s

  • Pay stubs

  • Bank statements

  • Driver’s license or state-issued ID

  • Social security number/card


Ask your family and friends who they’ve used for mortgage lending. Look at reviews and testimonials online. Consider asking your checking and savings bank for help navigating the world of home purchases—sometimes banks will give current customers better lending rates. Pick a lender that’s communicative, professional, and is willing to answer your questions.


Once you’re ready to earnestly start the home search and home purchase, it’s time to submit your application. Time it well, so that you’ll have it in hand for your offers while the pre-approval is valid (generally 60-90 days after it’s written). At the time of your submission, your lender will also pull your credit so that it’s fully up-to-date.


You can expect a pre-approval letter with a loan estimate in three business days. If you submit everything online, the turn-around may be faster. You’ll be able to see the potential cost of the loan, and what you can expect your financial undertaking to be for a specific house cost.

Ensure a Smooth Pre-Approval Process

If you want the pre-approval process to go well, improve or keep your finances and credit score steady. The better your financial outlook, the better rates you may be eligible for.


If you want a lower interest rate on your loan, you’ll want a higher credit score. When your lenders see a higher number on your credit, they’ll feel more comfortable with your financial stability and you will likely get pre-approval more easily. Build up or maintain good credit and you’ll reap the rewards, likely through a better pre-approval outcome.

RELATED: Building Credit for First-Time Buyers


Just like you should give your doctor all the information possible to be properly diagnosed, you should also give your lender everything you can, as accurately as you can. Guessing is fine when you’re using an online mortgage calculator, but when it comes to pre-approval, estimating won’t get you very far. And you’ll have to do double the work when you correct your data with the lender.


Just like you want to keep things accurate, you also want to avoid any major financial changes or purchases during or after the pre-approval process. That can change your DTI and throw off your pre-approval amount, or it can put a halt on your home purchase process. Once you’re pre-approved, stick to the basics and don’t buy a new car or open up a new line of credit. Changing employment can also be a big hurdle in the process, too. Stay in communication with your lender about everything that impacts your finances in a big way.

What to Do After Pre-Approval

After you’ve received your pre-approval, it’s time to start house hunting. You know what your budget is, and now all that’s left to do is find the perfect place and make an offer. If you’re wondering what other things you’ll need to do to become a homeowner, we can help with that, too.

If you’re ready to start your homeownership journey, start with pre-approval. Reach out to PacRes Mortgage today.

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