Getting a Pre - Approval Is Important Prior To Searching.

[Jerry Padilla]

Pre-approvals are important as a pre-approval letter

- Gives you a stronger offer

- Shows that you are serious and qualified for a mortgage to purchase the property of interest

- A pre-approval will also tell you how much you qualify for so you are looking in the right price range

- It will also help speed up the buying process once you found a house. There are two types of pre-approvals.

Quick Qualifying pre-approval: Involves looking into your income, down payment and credit report

Full Mortgage pre-approval: Takes all the necessary documentation to underwriting and generally takes 72 hours after all items are received.

Loan Commitment: Is what you receive after underwriting has reviewed the pre-approval.

[Jose Diaz]

@Jerry Padilla In my personal situation, I have come the understanding that pre-approval doesn't mean much. On the surface it apparently shows what you defined, however when you get to it, what matters is Full approval. I have been "pre-approved" 2 times spoken directly to branch managers and still got denied at the underwriters desk. Guess it wasn't my time.

[Jerry Padilla]

It is possible to get denied still after a pre-approval. It is important to go all the way through to loan commitment. I am not sure what your circumstance is. Sometimes, there are things that can be done to overcome being denied.

If it is a credit issue, it can be corrected.

Sometimes different banks look at income taxes differently, which can make a big difference in income.

[JOAN DICKIE]

You are totally right @Jerry Padilla . Around here, most realtors won't put you in a car to go look without a pre-approval and I don't know of any listing agents that will present an offer without one.

All buyers should get a pre-approval to make sure how much they really want to spend on a home. Total rent per month does not equal a mortgage payment unless you are already figuring in PMI, insurance and taxes into that amount. A loan officer can help you define each of these to help you decide what you can afford.

[Caleb Matteis]

@Jerry Padilla. How long does the pre approval process take, and does it effect your credit ?

[Jerry Padilla]

@Caleb Matteis Pre-approval take usually 24 hr for a turn around time. Underwriting  does take  about 72 hours for a  full approval. It will result in an inquiry on your credit. This one inquiry effects your credit slightly, but not very much. 

[Albert Bui]

I am sure everyone has their take on a pre-approval, my take is a pre-approval is only as good as the loan officer especially when it is issued purely from the loan officer's opinion.

Nowadays with a more purchase centric market since refi's have cooled off from may 2013 rate spikes banks are issuing fully underwritten TBD credit approvals which are a different animal. The bank in essence is writing a conditional loan approval subject to an "acceptable property." The property address on the conditional loan approval remains as TBD or to be determined till the borrower finds a property to contract with.

The advantage being that an underwritter has reviewed and stamped the file for approval with "conditions," along with the loan officer. Some would say this is 100% approval but its not depending on what the conditions are and underwriters in the past have made mistakes as well but yes it does make the approval probability very high, 98-99%.

[Lynn McGeein]

I agree that working with a lender to see what you'd qualify for can be a good tool, but don't make the mistake, like we did, of getting a pre-approval too early, then having to renew it when you haven't found anything in 2 months or so, when they want to pull another credit report to update it.  It turns out it does affect your credit score, a small amount the first time, but much more if you renew it, even though you didn't actually purchase anything in that initial time frame.  And if you are interviewing different lenders, be certain to do it all within a small period of time, like 2 weeks, as we messed up there as well, researching different lenders over a 2-3 month period looking for more investor-friendly options, not realizing that a month between lenders pulling credit apparently is taken as a different transaction to the credit bureau, not just us researching options for one purchase over a 6-month period.  Without actually purchasing a home or taking on any more credit, our scores had dropped 30 or so points in 6 months, even though nothing had changed beyond the inquiries, and I think inquiries stay on there for 2 years.