Contact lenders to get preapproved for a mortgage. It's easy and FREE!
A preapproval is useful in showing you what you can afford, but it's also important because it is required before you can see any homes listed on YELLOW. Sellers have the ability to limit the visits to their home to buyers above a certain preapproval level.
Having a preapproval helps both the buyer and seller because it prevents wasting time and resources on a home the buyer cannot afford. Plus, it helps keep sellers safe since they are letting people they don’t know into their home.
Getting a preapproval
Most people go to their bank or credit union for a mortgage preapproval since this is easy and familiar. Some professionals recommend shopping around and getting quotes from at least three different lenders, but we think the bank is adequate at least for a preapproval. You will want to shop around when applying for your actual mortgage after your offer is accepted, however.
The loan consultants with the bank have a wealth of information on loan types and will help determine the best loan for you. The preapproval is free and you'll usually hear back within a day.
Nonbank lenders like Quicken Loans are becoming increasingly popular and may be a solid option for you, too. However, they may not provide as much assistance and customer support, though it varies based on the company.
Here's a look at the top mortgage lenders:
Preapproval Process
The process for a preapproval is fairly straightforward.
You will submit some basic info about your financial situation and provide supporting documents – but it won’t be nearly as thorough as your actual mortgage application you will apply for once you have found a home.
The lender will review this information and pull your credit before granting your preapproval. This process is generally accomplished in one day (or even the same day) with large lenders, but can take up to two or three days.
A Word of Caution
It may be comforting to get a preapproval, but it doesn’t always mean you will eventually be approved for that mortgage.
Once your offer on a home is accepted, you will officially apply for the mortgage. A mortgage underwriter will have to finalize the mortgage application, which means they need to verify your information, request and review more financial documents, and verify that the property meets certain requirements. This process on average takes about 45 days or longer! It's not uncommon for someone who was preapproved for a mortgage to ultimately be rejected.
Here's an article on a preapproval that was later rejected for the mortgage:
Additional Resources
Mortgage Preapproval
Mortgage Basics
Qualifying for a mortgage
Should you use a bank or nonbank?
What can you really afford?
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