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
If you want to compare offers, try to get preapproved by multiple lenders within a 45-day period to limit the impact on your credit score. Once the lender assesses your credit and financial profile, it'll decide whether you're preapproved for a mortgage.
Is it worth getting pre approved for a mortgage? ›
Preapproval can be extremely valuable when it comes time to make an offer on a house, especially in a competitive market where you might want to stand out among other potential buyers. Again, a seller will be more likely to consider you a serious buyer because you have had your finances and creditworthiness verified.
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.
Does getting preapproved for a mortgage hurt credit? ›
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.
Is too many pre-approvals bad? ›
In fact, you can — and should — get preapproved with multiple lenders. Many experts recommend getting at least three preapproval letters from three different lenders. Each mortgage lender will give you a unique offer with its own interest rates, loan amounts, origination fees, and other upfront closing costs.
How often do pre-approvals fall through? ›
What are my chances of getting denied after preapproval?
| Loan program and purpose | Closing rate |
|---|
| Conventional purchase | 80% |
| FHA refinance | 65% |
| FHA purchase | 78% |
| VA refinance | 72% |
2 more rowsGetting preapproved for a mortgage requires a hard credit pull, which can lower your credit score. However, the drop in score is fairly minimal and only temporary. For most people, the benefits of preapproval outweigh this drawback.
What is a good credit score to get pre-approved for a mortgage? ›
A credit score of at least 620 is recommended to qualify for a mortgage, and a higher one will qualify you for better rates. Generally, a credit score of 740 or above will enable you to qualify for the best mortgage rates.
What credit score is needed to buy a house? ›
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
How much do you have to make to get approved for a 250 000 mortgage? ›
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This field is for validation purposes and should be left unchanged. To afford a $250,000 house, you typically need an annual income between $62,000 to $80,000, depending on your financial situation, down payment, credit score, and current market conditions.
To comfortably afford a $500,000 house, you'll likely need an annual income between $125,000 to $160,000, depending on your specific financial situation and the terms of your mortgage. Remember, just because you can qualify for a loan doesn't mean you should stretch your budget to the maximum.
What income do banks look at when buying a house? ›
Mortgage lenders often look at gross monthly income to determine how much mortgage you can afford, but it's also important to consider your net income, as well.
Does it hurt your credit score to see if you're pre approved? ›
No, because prescreened offers and pre-approval involve a soft inquiry. Also known as a soft pull or soft credit check, a soft inquiry doesn't affect your credit scores. The soft inquiry is simply a way for lenders to determine whether you may qualify for their credit card offer.
What would stop you from getting pre approved for a mortgage? ›
You'll likely need a DTI that's less than 43% to qualify for a mortgage, but many lenders set the bar at 36%. You've missed a debt payment. Failing to pay your bills could damage your credit and make lenders wonder if you're experiencing financial stress.
Can you be turned down after getting pre-approval mortgage? ›
Changes in Loan or Lender Guidelines
Sometimes, mortgage denial after preapproval is beyond your control. Loan requirements change constantly, and lenders may adjust their requirements based on the current economic conditions.
How far ahead should you plan to buy a house? ›
When to Start Looking for a House. As a general guideline, it's advised to start house hunting five to six months before you want to move in. This might seem like a long time, but there's plenty to do.
How far in advance should I get a loan for a house? ›
For a smoother home buying process, it's advisable for you to obtain mortgage preapproval quite early, ideally weeks before you start thinking about making an offer on a house.
Can you make an offer on a house before pre-approval? ›
You do not have to have a pre-approval to make an offer on a home. You can put in your bid and a lender may consider it. However, if there are multiple buyers making offers on the home, the ones with a pre-approval tend to stand out more as it shows that they have been assessed already for approval of a loan.
How many mortgage preapprovals should I get? ›
While there's no right number of mortgage lenders to get quotes from, the CFPB suggests contacting at least three.
