The Truth About Pre-Approval.
The Skinny on Pre-Approval Getting pre-approved is another step, and it tends to be much more involved. You'll complete an official mortgage application and usually you will pay an application fee, and then supply the lender with the necessary documentation to perform an extensive check on your financial background and current credit rating and give yourself and the lender a full and complete financial picture. Typically at this stage, you will not have found a house yet, so any reference to "property" on the application will be left blank, as this is an approval for a pre-determined broad amount to give all people involved a detailed financial understanding of your buying power. From this point the lender can tell you the specific mortgage amount for which you are approved. You'll also have a better idea of the interest rate you will be charged on the loan and, in some cases, you might be able to lock in a specific rate. With pre-approval, you will receive a conditional commitment in writing for an exact loan amount, allowing you to look for a home at or below that price level. Obviously, this puts you at an advantage when dealing with a potential seller, as he or she will know you're one step closer to obtaining an actual mortgage and are a serious buyer who has put in the work required to make a real purchase. The other advantage of completing both of these steps – pre-qualification and pre-approval – before you start to look for a home is that you'll know in advance how much you can afford. This way, you don't waste time with guessing or looking at properties that are beyond your means. Getting pre-approved for a mortgage also enables you to move quickly when you find the home for you, and in a seller’s market and a fast paced market such as DFW you must, must be able to move quickly. When you make an offer, it won't be contingent on obtaining financing, which will save you valuable time. In a competitive market such as DFW, this lets the seller know that your offer is serious – and could prevent you from losing the home, or land or investment property to another potential buyer who already has financing arranged.