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Mortgage Pre-Approval 101


Mortgage Pre-Approval 101

Jessica Evans

For Jessica Evans, real estate is more than a job — it’s a way of life...

For Jessica Evans, real estate is more than a job — it’s a way of life...

May 31 4 minutes read

One of the most important steps in the home buying process (if you plan to use a mortgage for your purchase) is getting pre-approved for a mortgage. Mortgage pre-approval is part of the lender consultation process where you will work with your lender to determine the best loan options for your objectives and what your target price range should be. Here are some of the top questions around mortgage pre-approval and the information that you need to know.

What is mortgage pre-approval?

In its simplest form, mortgage pre-approval is figuring out how much money you can borrow from a bank for your home purchase. 

The process of getting pre-approved for a mortgage involves a lender reviewing your income and asset information and your credit score, and then making a determination of whether or not your loan application is likely to be approved and in what amount.

When you complete the mortgage pre-approval process, you will receive a pre-approval letter. This letter, which is submitted with an offer to purchase a home, and indicates to home sellers that you are able to complete the purchase if they accept your offer. 

Why is pre-approval important?

If you want to buy a home, how you will go about completing the purchase is important information to start with. Just like when you go shopping and know how much money is in your wallet, pre-approval lets you know how much you can spend and what you will need to complete your purchase.

Can I wait until I find the house that I want to purchase before getting pre-approved?

The short answer is no. As real estate agents, we don’t think this is a good idea and it doesn’t set you up for success. Waiting until you find a home that you want to purchase doesn’t allow you the time needed to have a lender consultation and determine your financial objectives. Serious buyers are pre-approved before they begin looking at homes, and you could miss out on a home you love if you’re not ready to go when you see it. Waiting to get pre-approved is one of the top mistakes buyers make and increases your chances of missing out on the home that you want. Additionally, many real estate agents will not work with buyers who are not pre-approved.

What if I can’t get pre-approved for the mortgage that I want?

That’s completely OK! It’s not unusual for buyers to start the process and determine that they need to work on their purchasing power before they move forward with their home search. Your lender can give you exactly the information you need to know to budget and save, as well as advice on improving your credit score if that’s a factor. The higher your credit score is, the lower your cost of getting a mortgage will be.

What information will I need?

Your lender will need to verify your income, assets and credit score, as well as any other liabilities that you have. This is a little different depending on the specifics of your situation but may include:

  • Income: tax returns, pay stubs

  • Assets: bank statements, or other financial statements 

  • Credit score: they will obtain a copy of your credit report


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