How soon should you get pre approved for a mortgage

If you’re ready to make your dream of owning a home a reality, you’ve probably already heard that you should consider getting prequalified or preapproved for a mortgage. It’s time to understand exactly what each of those terms means and how they might help you. And when you’re working toward a goal this big, you want every advantage.

Ready to prequalify or apply?

Homebuyer tip:

You may qualify to borrow more money than you are comfortable spending on a home. But that doesn't mean you have to spend more. It's a good idea to limit your home search to houses priced at an amount you can comfortably afford. Explore the mortgage amount that best fits into your overall budget by using Bank of America's Home Affordability Calculator.

What is mortgage prequalification?

Prequalification is an early step in your homebuying journey. When you prequalify for a home loan, you’re getting an estimate of what you might be able to borrow, based on information you provide about your finances, as well as a credit check.

Prequalification is also an opportunity to learn about different mortgage options and work with your lender to identify the right fit for your needs and goals.

What is mortgage preapproval?

Preapproval is as close as you can get to confirming your creditworthiness without having a purchase contract in place. You will complete a mortgage application and the lender will verify the information you provide. They’ll also perform a credit check. If you’re preapproved, you’ll receive a preapproval letter, which is an offer (but not a commitment) to lend you a specific amount, good for 90 days.

Homebuyer tip:

Expect surprises! Lenders look at every detail of your finances when granting preapproval. You might be asked about a car loan payment you made with a credit card, for example. Be prepared to answer lender questions as soon as they come up.

Getting preapproved is a smart step to take when you are ready to put in an offer on a home. It shows sellers that you’re a serious homebuyer and that you can secure a mortgage – which makes it more likely that you’ll complete your purchase of the home.

How long does prequalification or preapproval take?

Aside from their distinct roles in homebuying, prequalification and preapproval can take different amounts of time. Prequalifying at Bank of America is a quick process that can be done online, and you may get results within an hour. For mortgage preapproval, you’ll need to supply more information so the is likely to take more time. You should receive your preapproval letter within 10 business days after you’ve provided all requested information.

What information do I need to provide?

PREQUALPREAPPROVALIncome informationCopies of pay stubs that show your most recent 30 days of incomeCredit checkCredit checkBasic information about bank accountsBank account numbers or two most recent bank statementsDown payment amount and desired mortgage amountDown payment amount and desired mortgage amountNo tax information requiredW-2 statements and signed, personal and business tax returns from the past two years

Which is right for me?

First-time homebuyers are more likely to find that getting prequalified is helpful, especially when they are establishing their homebuying budget and want an idea of how much they might be able to borrow.

Preapproval can be extremely valuable when it comes time to make an offer on a house, especially in a competitive market where you might want to stand out among other potential buyers. Again, a seller will be more likely to consider you a serious buyer because you have had your finances and creditworthiness verified.

PREQUALIFICATION VS. PRE-APPROVAL COMPARISON

PREQUALPREAPPROVALBenefitsYou can start house-hunting knowing how much you might be able to borrowYou’ll be ready to make an offer with confidence—and gain a competitive advantageProcessProvide basic information to a lender and quickly get a prequalification amountAfter submitting documentation to a lender, you should receive a decision within 10 business daysDocumentationAnswer questions for this process, plus a credit checkProvide proof of financial details, plus a credit check

How long a mortgage preapproval is good for can vary depending on your lender. In most cases, it lasts for around 60 – 90 days. Your financial situation can change substantially within a few months, and many lenders aren’t willing to take the risk of their agreement with a prospective borrower falling through beyond the 90-day mark.

It can, however, be a good thing for a borrower’s financial situation to change. For example, upon your first preapproval, you may learn that you have a low credit score. If you lower your debt-to-income ratio and take other steps toward repairing your score, you could receive a lower rate on your next mortgage preapproval.

Alternatively, credit scores could go down, debt could increase or there might be some other negative impact on your ability to make mortgage payments, affecting your likelihood of moving forward in the loan process. In that case, you may receive a higher interest rate or smaller loan amount for your preapproval. Or, you might not qualify at all if the negative changes are impactful.

Some borrowers’ financial situations don’t change, but they haven’t purchased a house, so their mortgage preapproval expires. They’ll still need to get a new preapproval letter. If your letter has expired, you’ll have to find a new lender or reapply to the same one.

When should I get preapproved for a mortgage?

Does pre approval hurt credit score?

How long is a pre approval good for?