Fast-Track Your Home Purchase: How to Get Pre-Approved Quickly

Home Purchase: Pre-approval Basics

A mortgage pre-approval isn't just an upmarket term; it's a proven way to demonstrate to sellers that you're a serious buyer. A pre-approval requires your lender to review your financial documents, credit history, and other critical factors to determine your creditworthiness.

Home Purchase Pre-approval vs. Pre-qualification

A mortgage pre-qualification provides a quick estimate based on self-reported, surface-level finances. Alternatively, mortgage pre-approval offers a more thorough process, increasing your ability to stand out with sellers.

Documents Needed for Pre-approval

You'll need several documents for the pre-approval process. We've broken them down by category for you here.

Employment

Paystubs: 30 days
Tax returns: two years
Bank statements: three months
Employment verification: past two years
Self-employment business records, if applicable
Other income sources

Assets and Debts

Investment statements: two to three months
Loan and credit card statements: past 60 days
Other owned real estate properties

Credit History

Credit reports and scores
Rental history and landlord contact information

Personal Identification Documents

Driver's license or other acceptable form of ID
Social Security card
Letters of recent residencies or tenures

Streamlining Mortgage Approval

Many lenders can return a mortgage pre-approval within a few days, compared to an average of 45-60 days for mortgage applications without pre-approval.

However, you can hasten the process more by doing the following.

Have all your documents ready
Check your credit report before approaching the lender and rectify any errors
Pay down debt balances
Avoid taking on new debt, such as new credit cards or loans
Maintain a stable employment history

Avoid These Common Home Purchase Mistakes

Like any journey, the path to home buying has pitfalls. Thankfully, you can avoid them. So, let's go over the most common missteps to ensure your experience is smooth and steady.

1. Insufficient Credit History

It takes time to build credit, and most mortgage lenders like to see at least 24 months of credit history, including activities such as:

Paying bills on time
Using credit cards responsibly
A low credit utilization rate — using 30% or less of your approved credit line

2. High Debt-to-Income Ratio

Your debt-to-income ratio (DTI) is how much debt you have versus your amount of income. Aim for a maximum of 36% for the best mortgage interest rates. The lower your DTI, the better your chances of snagging better interest rates.

3. Unstable Employment

Most lenders prefer to see a stable employment history, which means few or no job changes over the past two to three years. If you plan to change jobs, it's best to wait until after your home purchase, as this can affect pre-approval and full mortgage approval.

4. Neglecting Your Credit Score

Monitor your credit report for errors. If you find any, rectify them immediately. And if you see areas for improvement, like paying down debt, address them promptly.

5. Failing to Budget for Additional Costs

Owning a home comes with extra costs beyond your mortgage, like taxes, insurance, maintenance, repairs, and sometimes homeowner association fees. Budget accordingly to avoid overextending your finances.

6. Skipping Mortgage Pre-approval

Waiting for full mortgage approval can set you up for disappointment if your credit history or something else needs tweaking. Alternatively, pre-approval gives you more confidence during the home-buying process. It'll also show you areas of concern before full mortgage approval.

7. Impulsive Large Purchases or a New Credit Line

Large purchases such as a new car and applying for a new line of credit impact your credit history and score, increasing your DTI. Instead, delay large purchases and apply for new credit after your home purchase.

In Summary

Mortgage pre-approval benefits you by helping you stand out as a serious buyer and giving you financial confidence during the process. Avoiding common pitfalls along the way is also essential to smooth your home purchase from beginning to end while keeping your finances in check.

Are you ready to get started? Apply online today for a mortgage pre-approval and start looking for your dream home tomorrow.

Sources

https://www.extracobanks.com/personal/loans/home-loans
https://www.bankrate.com/mortgages/documents-for-preapproval/
https://www.creditstrong.com/how-much-credit-history-is-needed-to-buy-a-house/
https://www.investopedia.com/terms/d/dti.asp
https://www.realtor.com/advice/finance/how-long-does-it-take-to-get-a-mortgage/