How early should i get preapproved for a mortgage

Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors' opinions or evaluations.

When Katerina Matsa and her husband became interested in buying a house in Washington, D.C. two years ago, she first turned to real estate listing websites such as Zillow and Redfin. Like many others, she was drawn to the seemingly endless photos of remodeled kitchens and newly planted gardens.

Once she was ready for more substantive action, she reached out to a real estate agent whom she knew through her social circle. She never considered contacting a mortgage lender, let alone becoming preapproved for a loan at this point in the process. “We immediately focused on a real estate agent because we had a connection,” she recalls. “We didn’t even think about a lender. In fact, we depended on our agent to recommend a lender for us.”

A Lender’s Role in the Home Purchase Process

For most people, mortgage lenders hold the key to completing a home purchase. Yet, the ways in which they help potential buyers—such as providing a preapproval letter and ultimately extending a loan—remain unclear and undervalued.

In some cases, lenders may just market their services less prominently than real estate agents. In other cases, people may resist discussions about their financial history. And, for almost everyone, it’s just more fun to admire and tour homes currently on the market.

In reality, though, a home buyer is more likely to close on the house that they want if they contact a lender at the beginning of their search. What may feel to a first-time home buyer like the most intimidating part of the process will lead to less stress and disappointment in the months that follow.

From the seller’s perspective, a preapproval letter from a reputable local lender often can make the difference between accepting and rejecting an offer. As a result, buyers would benefit from educating themselves on the steps required to reach that point.

Mortgage Preapproval Letter

If you’re ready to begin house-hunting, your first priority should be getting a mortgage preapproval letter from a lender. The preapproval letter shows the seller (and the real estate agent advising them) that you’re serious about buying the home and know how much you can afford.

Preparing for the Preapproval Process

Before contacting a lender, buyers should visit AnnualCreditReport.com to obtain a free copy of their credit reports from the three national credit bureaus (Equifax, Experian and TransUnion). Buyers can save both themselves and their lenders some time if they can identify—and attempt to correct—any errors or major deficiencies in their credit history. Some mortgage lenders recommend reaching out to them as early as 12 months before a buyer plans to buy a home for these same reasons.

Reaching out to a lender 12 months in advance “may seem too early,” says Christopher Jordan, branch manager for Main Street Home Loans in Silver Spring, Maryland. “But if there’s anything you need to work on, it gives us time to prepare. A credit issue may take four to six months to fix, and we want to make sure that we build enough time” into the purchase process.

The extra time also comes in handy for gathering the financial documents a lender needs to issue the preapproval letter. The list can be long. In many cases, the buyer may not have looked at or accessed the files in years. Here’s a sampling of the paperwork that a buyer may need to provide:

• Copy of your Social Security card
• Employment W-2 forms from multiple years
• Pay stubs
• Recent statements for every bank and investment account
• Tax returns from at least the past two years

Buyers often procrastinate on this task, if only because they don’t know where to start when selecting a lender. They also may feel wary about selecting the “wrong” lender, especially if they fear wasting their time or delaying their home buying timeline.

Selecting a Mortgage Lender

A first-time home buyer understandably might assume that all mortgage lenders offer the same thing: money to purchase a house. After all, mortgage lending is a competitive industry in which individual lenders—especially on the local level—rarely differentiate themselves in a publicly visible way.

Now that several large, national mortgage lenders have shifted the preapproval process online, buyers may feel tempted to proceed with the fastest or least-invasive option. Yet, small differences in mortgage lenders can help to avoid regrettable decisions and even secure meaningful savings over the long term.

A good mortgage lender’s preapproval letter should carry significant weight with the real estate agent responsible for the property that the buyer most desires. The lender essentially builds this credibility through strong customer service. In this context, that means asking questions about why you’re interested in homes at a particular price point, what monthly payment your budget can absorb and what else you may need your savings for.

Any lender can quickly preapprove a buyer for the maximum amount that their company permits based on certain variables. A listing agent will have learned over time, though, that these lenders’ customers are more likely to encounter issues before closing. This is one reason why real estate agents are a good source for finding a lender.

Agents have an incentive to work with lenders who can guide buyers appropriately and help ensure that they’re prepared to complete the transaction.

Michael Fischer, managing broker and vice president of Homestead Realtors in Atlanta, says, “I encourage my clients to use me as a resource, since I know local lenders who will do a good job. They can trust that I’ve vetted the lender previously and confirmed that he or she can get the deal done at competitive terms.”

Even so, Fischer encourages clients to contact more than one lender in order to obtain the best possible interest rate and gain access to different loan options. Ultimately, no matter which lender a buyer uses, a good agent will work to establish a relationship with that lender as part of building a strong team around the buyer.

How Long Does It Take To Get Mortgage Preapproval?

The speed at which a lender preapproves a potential borrower varies. It depends a lot on how quickly you gather and submit the necessary documents and how long it takes them to review your financial paperwork.

Once the lender has all your information, you should receive a loan estimate within three business days—much less if you use an online mortgage lender—that will tell you whether or not you’ve been preapproved and for how much.

How Long Does Preapproval For A Mortgage Last?

The mortgage preapproval is not indefinite, but the length of time varies depending on the lender. Most mortgage pre-approvals are valid for 30 to 90 days and then expire.

More Than Pre-Qualification

Mortgage preapproval and pre-qualification are different, so don’t confuse the two. Articles about home buying may mention both terms in the same sentence, but a buyer who becomes “pre-qualified” hasn’t actually accomplished much. This process typically only involves a conversation or a credit score review.

Since pre-qualification doesn’t verify financial data, identify red flags or address potential issues, it won’t improve a buyer’s standing with the seller’s team. Buyers have more to gain from focusing on preapproval, which will take more time but actually impacts the purchase effort.

Mortgage preapproval represents a lender’s offer to loan the buyer money based on certain financial circumstances and specific terms. The lender reaches this point only after reviewing and confirming the buyer’s credit standing, employment, income, assets and/or tax returns.

Even as a preapproval letter empowers a buyer to move toward a home purchase, it doesn’t limit the buyer’s lending options. Buyers don’t have any obligation to obtain a loan from a lender with whom they have had a conversation, shared financial documents or received a preapproval letter.

Mortgage Preapproval Cautions

For almost any potential home buyer, the preapproval process offers substantial benefits. From a transaction standpoint, a lender’s support can strengthen any purchase offer that the buyer submits. And, for a buyer’s personal finances, the steps involved in preapproval can help a buyer to better grasp the implications of various payment amounts—both up front and on an ongoing monthly basis.

These preapproval benefits, however, come with some important conditions that buyers will want to note. The personal financial circumstances that form the basis for a lender’s willingness to extend a mortgage to a buyer can change over time. As a result, mortgage preapprovals will expire after a certain time period, such as 90 days.

If the buyer hasn’t gone under contract at that point, a lender will need to run through the preapproval checklist again, using updated financial data as necessary. For these reasons, the preapproval doesn’t guarantee a loan or any particular terms. The mortgage that the lender ultimately extends will depend on the exact conditions at the time the buyer needs the funds.

For these reasons, buyers are strongly encouraged to keep their personal finances as static as possible as they move closer to a purchase.

Changing jobs, opening new accounts or lines of credit or moving around significant amounts of money can create confusion and uncertainty about the buyer’s financial standing. When such changes are unavoidable, buyers can mitigate their impact through constant communication with the lender. A buyer should make sure to save and pass along any documentation related to the events.

Anxiety or a lack of information should not discourage potential buyers from starting the mortgage preapproval process.

“I wish people wouldn’t be so afraid to have their credit checked,” says Jordan. “Your credit score won’t plummet as a result. It’s far more valuable to find out in advance whether your credit is good or needs work. You don’t want to find yourself saying, ‘I wish I had started this process four months ago.’” In fact, FICO, the credit scoring service, won’t penalize buyers for multiple lender credit checks within a short time frame.

Final Steps Before Closing

For all the assurances that a mortgage preapproval letter creates, only a loan commitment letter signals final mortgage approval. When a seller accepts an offer on their house, the buyer will complete at least one full mortgage loan application. The terms, including fees and other costs, may differ in the estimate documents that the buyer receives from the lender.

Even at this late stage in the home buying process, shopping around and comparing offers still has significant value. The buyer then will select their preferred lender and schedule a property appraisal. Once the lender finishes the underwriting process, they can issue the loan commitment letter.

Mortgage Preapproval in Hindsight

Katerina Matsa ultimately closed on her first home purchase in late 2018. Looking back, she only now appreciates the critical financial role that her lender played in the home buying process.

“If I could go through the preapproval process again, I would have more thorough conversations with the lender about our mortgage options. I would ask more questions and make sure I fully understand various details. Everything happened so fast. That was the downside of starting the process so late.”

Faster, easier mortgage lending

Check your rates today with Better Mortgage.

Frequently Asked Questions (FAQs)

Does getting preapproved for a mortgage hurt my credit score?

Your credit score will only be negatively impacted if the lender does a hard credit check as part of the preapproval process. However, most lenders only use a soft credit inquiry for preapprovals which will not impact your credit score.

Should I get preapproved by more than one lender?

Yes, you should compare multiple lenders. But only apply to get preapproved by those who offer a mortgage that meets your needs.

Will getting preapproved by multiple lenders hurt my credit score?

If you’re shopping around for a mortgage with different lenders, the multiple credit inquiries they conduct as part of the process are viewed as one inquiry—if they all occur within a given period of time, typically within 45 days. This means your credit score will not be negatively impacted, and allows you to get preapproved with multiple lenders in that window.

However, if you try to get multiple preapprovals but the applications don’t all fall within that grace period, your credit score will be slightly impacted with each check.

How can I increase my mortgage preapproval amount?

There are many ways you might get a lender to increase the amount you’re preapproved for:

• Improve your credit score.
• Submit documents showing additional sources of income besides your salary.
• Pay down your debts to improve your debt-to-income (DTI) ratio.
• Switch to a different lender that might view your application differently.
• Increase the size of your down payment to 20%. This will eliminate private mortgage insurance (PMI) from your monthly payments and might make the lender more willing to up your preapproval amount.
• Apply for a loan with a longer term. A loan with a longer lifespan has smaller monthly payments, so the lender might lend you more as a result.
• Get a co-signer with a great credit score and high income.

How far in advance should I get preapproved for a mortgage?

Some mortgage lenders recommend reaching out for preapproval as early as 12 months before you plan to buy a home to get a head start on addressing any issues that might come up. But overall, the time between when you apply for preapproval and when you begin house-hunting depends on your unique situation, how prepared you are and how ready you are to commit to the process.

Can a mortgage be denied after preapproval?

A mortgage can be denied after preapproval if you no longer meet the requirements of the loan. Here are some reasons you might be denied after being preapproved:

• Your credit score dropped below the 620 threshold preferred by most lenders.
• You took on more debt, making your DTI worse.
• You lost your job or changed your employment.
• The home you wanted to buy doesn’t meet all of the mortgage contingencies.

What happens if my mortgage preapproval expires?

If your mortgage preapproval expires, your lender might ask you for additional documents, such as recent bank statements, to confirm your financial situation has stayed the same and you still meet eligibility requirements. Once your information is reviewed, and the lender has no issues, you’ll get a new preapproval letter with a new expiration date.

Do pre

Is there a downside to getting preapproved?

Should I get pre

Is preapproval soft or hard pull?