Getting pre-approved for a mortgage is generally a good idea before you start looking for a real estate agent or viewing homes to buy.
Here are some reasons to start by getting pre-approved for the mortgage.
- Know your buying power: By getting pre-approved, you'll know how much you can borrow based on your financial situation. You'll have a good idea of what you can afford, and it will help you narrow your home search to properties that fit your budget.
- Save time: When you know what you can afford, you can avoid wasting time looking at homes outside your price range.
- Be taken seriously by sellers: Sellers are more likely to take you seriously when you're pre-approved for a mortgage.
- Negotiate better: You can make a more credible offer and negotiate a better price or other favorable terms.
- Close faster: With a verified mortgage pre-approval from NewCastle Home Loans, you can be ready to close in 15 days, half the time it takes other lenders.
Overall, getting pre-approved for a mortgage before looking for a real estate agent or viewing homes to buy can save you time, money, and stress and make the home-buying process smoother and more successful.
When should you get pre-approved for a mortgage?
Finding the right home that meets your needs and preferences can take weeks or months. Starting early on your search gives you enough time to explore different neighborhoods, view multiple properties, and find the right home for you.
The best time to get pre-approved for a mortgage is between 1 and 4 months before buying a home. Here are some steps you need to complete after you get pre-approved and before you own a home.
- Find the right home: It can take time to find the right home that meets your needs and preferences. Give yourself enough time to explore different neighborhoods, view multiple properties, and find the right home for you.
- Negotiate the purchase: Once you find a home you want, negotiate the purchase price, contingencies, and other contract terms. An early start gives you time to negotiate and make an appealing offer.
- Get approved for the mortgage: The approval process takes several weeks with some lenders. Give the lender enough time to process the paperwork and approve your loan before closing.
- Close the deal: Even after loan approval, preparing for closing can take longer than expected for some lenders. Working with a local mortgage lender like NewCastle Home Loans helps you stay on track and close on time.
If you know what you're going to buy and are ready to make an offer, then you should give yourself 30 days to complete the remaining steps.
Unlike banks and online lenders, NewCastle Home Loans can have your home loan ready to close on time within 30 days. We typically approve and close mortgages in 15 days.
Overall, starting your home search one-to-four months before you want to close can help ensure that you find the right home, negotiate the purchase, secure mortgage approval, and close on time without surprises or delays.
How long does a mortgage pre-approval last?
You should start the pre-approval process less than four months before buying a house. Your mortgage pre-approval letter is good for four months from the date we check your credit report. After that, your credit expires, and so does your pre-approval letter.
During this time, it's essential to maintain a good credit score and avoid making any significant changes to your credit history. If your credit score changes significantly or you take on new debts, it could affect the terms of the mortgage pre-approval.
If you're still looking for a home to buy after your initial pre-approval letter expires, we'll update it. Updating the pre-approval is easy. First, we re-check your credit and re-verify your financial information. Then, you get a new pre-approval letter so that you can take advantage of every opportunity.
FAQs
The best time to get pre-approved for a mortgage is technically when you're shopping around. You want to do it ideally before you're shopping around, so you can get an idea of exactly how much you can afford, what your monthly payments are, what your monthly obligations are.
How early should you get preapproved for a mortgage? ›
Starting early on your search gives you enough time to explore different neighborhoods, view multiple properties, and find the right home for you. The best time to get pre-approved for a mortgage is between 1 and 4 months before buying a home.
What determines your pre approval amount? ›
What Determines Your Preapproval Amount? Lenders base your preapproval amount on the risk they take to loan you money. In other words, you can get preapproved for a higher amount if your financial history shows that you have a higher likelihood of making payments consistently and on-time.
Is it common to be denied a mortgage after pre approval? ›
Though it isn't common, lenders can deny your mortgage application after pre-approval. There are a few reasons this can happen, but all of them can be prevented with a little preparation and foresight.
How long does it take to get a mortgage answer? ›
After having an offer accepted on a property and applying for a mortgage, on average it can take from two to six weeks to get a mortgage approved.
How much can I borrow with a 700 credit score? ›
You can borrow from $1,000 to $100,000 or more with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
How far in advance should I apply for a mortgage? ›
The best time to get pre-approved for a mortgage is at least one year before you decide to purchase. As a home buyer, pre-approvals are for your benefit, so it's never too early to get one. Getting pre-approved early is an advantage because one-third of mortgage applications contain an error.
How do I get the highest preapproval? ›
You can take various steps to increase your preapproval amount. These include making a higher down payment, getting a longer loan term, finding a co-signer and, perhaps, becoming preapproved by multiple lenders. It's also best to start the home buying process in a position of financial strength.
How to get the highest mortgage approval? ›
8 Tips To Help You Get Approved For A Higher Mortgage Loan
- Improve Your Credit Score.
- Generate More Income.
- Pay Off Debts.
- Find A Different Lender.
- Make A Down Payment Of 20%
- Apply For A Longer Loan Term.
- Find A Co-Signer.
- Find A More Affordable Property.
To increase your chances of mortgage approval, consider improving your credit score, minimizing debt, having a stable income and employment history, and saving for a down payment. Getting pre-approved before house hunting can also strengthen your offer.
If the declination letter doesn't specify a reason, contact the lender to ask. Most often, loans are declined because of poor credit, insufficient income or an excessive debt-to-income ratio. Reviewing your credit report will help you identify what the issues were in your case.
Will I lose my deposit if I am denied a mortgage? ›
If the buyer fails to get approval for a mortgage, the buyer can terminate the contract and remain entitled to their earnest money deposit, basically holding the bank responsible for the failed process.
What not to do during underwriting? ›
Tip #1: Don't Apply For Any New Credit Lines During Underwriting. Any major financial changes and spending can cause problems during the underwriting process. New lines of credit or loans can interrupt this process. Also, avoid making any purchases that may decrease your assets.
How long does it take to hear back about mortgage pre approval? ›
For mortgage preapproval, you'll need to supply more information so the application is likely to take more time. You should receive your preapproval letter within 10 business days after you've provided all requested information.
How soon should I talk to a mortgage lender? ›
“The moment you think about buying a home is when you should be talking to a lender,” Rueth says. “You don't have to already be in the process of buying a home to do this. You can be two years away from buying a home and still start that conversation.”
How long does it take to hear back from underwriting for a mortgage? ›
How long does the underwriting process typically take? Underwriting can take a few days to a few weeks before you'll be cleared to close.
Is there a downside to getting pre approved for a mortgage? ›
A mortgage preapproval can have a hard inquiry on your credit score if you end up applying for the credit. Although a preapproval may affect your credit score, it plays an important step in the home buying process and is recommended to have. The good news is that this ding on your credit score is only temporary.
Do pre-approvals affect credit score? ›
Generally, preapproved offers, such as those from credit card issuers, don't directly impact your credit score. But once you accept the preapproval, the lender will likely review your credit history as part of a more thorough final approval process, which will result in a hard inquiry.
How many paychecks do you need to get pre approved for a mortgage? ›
If you're wondering how many pay stubs you need for a mortgage, usually, two will suffice for most lenders. Lenders will also look for payment information over the last 30 days to ensure you make enough to pay your mortgage bills.
How many pre-approvals should I get? ›
How many mortgage preapprovals should I get? While it's a good idea to rate-shop with at least three lenders, you only need one preapproval letter to make an offer on a home.
