Learn How to Get Preapproved for a Mortgage
Is getting pre-approved for a mortgage bad for your credit?
If your lender conducts a hard query to obtain your credit report from one of the three major credit bureaus – Equifax®, TransUnion®, or ExperianTM – your credit score may temporarily decline by a few points. Rest assured, however, that this reduction will not have a major or long-term impact on your credit.
Is it possible to buy a property for less than your preapproval?
Yes! While your lender may accept you for a hefty mortgage, you are not compelled to purchase a home worth that amount. The amount of your preapproval is the maximum loan amount that the lender is willing to provide you. Borrowing less will save you money throughout the term of the loan.
Is getting preapproved with a lender a guarantee of approval?
Preapproval does not imply or promise that your lender will approve you for the final loan. If your finances change significantly between the time of your preapproval and the time your lender begins the underwriting procedure, or if the home does not appraise well, they may refuse to offer you the loan.
What should I do if I am unable to obtain preapproval?
It is possible that your lender will deny you preapproval or the desired amount. Your credit score may be too low, your debt-to-income ratio (DTI) may be too high, or the lender may determine that your income is insufficient for the size of mortgage you desire.
If you are denied, speak with your lender about the particular measures you need to take to enhance your chances of preapproval and start preparing strategies to improve your financial status.
Bottom Line
When purchasing a home, mortgage approval is required. Receiving a preapproval letter from your lender might give you a better idea of how much house you can buy, allowing you to confidently navigate the property market.
When talking with your lender about getting preapproved, make sure you have all of the essential papers and that you can portray your finances in the best possible light.
