Pre-Approval: What it is & How to Achieve it

by Leslie Howard 09/26/2020


 Photo by Clker-Free-Vector-Images via Pixabay

A mortgage pre-approval can be a valuable tool for understanding how much you can afford to spend on purchasing a home. It can also make you seem much more attractive to sellers and help to identify any potential problems that may make it difficult to get a loan. In fact, many lenders claim that if a buyer isn’t pre-approved for a mortgage, they will have a difficult time navigating the real estate market. But what does pre-approval really mean?

What is a Mortgage Pre-Approval?

While it can sound like you’ve got a sure thing locked in when you’re pre-approved for a mortgage, being pre-approved doesn’t promise that you’ll be able to secure a loan for the home that you want to purchase. A mortgage pre-approval simply means that a loan officer has reviewed your finances and decided how much money you're allocated to borrow, what you should be able to pay each month towards your mortgage and what your interest rate will be.

Once, you’ve been pre-approved by a lender, you will get a letter that can be shown to sellers. This letter indicates that you’ve already established a working relationship with a lender. This helps to give sellers peace of mind in knowing that you’re serious about putting in an offer on their home, and they don’t have to risk wasting time with a buyer who isn’t serious.

What Are the Benefits of Getting a Pre-Approval?

A pre-approval doesn’t guarantee you’ll get a mortgage but it does offer a few key advantages during your search for the ideal home. It helps to give you confidence while looking at potential properties, as you look at homes that are within your budget. There’s no need to fall in love with a home that you can’t afford. Additionally, it establishes credibility as a buyer, showing that you have your finances under control and can help to put you on the fast-track to closing once you’ve found the perfect home.

Are Pre-Approval & Pre-Qualified the Same Thing?

Unfortunately, no. These two similar real estate terms are not interchangeable. When you are pre-qualified for a mortgage, this indicates that you have given your lender information regarding your income, debts and assets. Without doing further research, the lender then tells you that you should qualify for a certain mortgage. Pre-approval is a much more in-depth process, requiring your lender to verify the financial information provided by pulling your credit history, as well as verifying your income and assets.

About the Author
Author

Leslie Howard

Leslie Howard joined the Sotheby’s International Realty team early in 2018. Despite her recent start, she hasn’t missed a beat. This is partially due to Leslie being a Denver area resident for over 20 years. As an invested resident in her community, she has a developed a keen awareness and understanding of the Denver metropolitan area. With her knowledge of the community, her excellent communication skills and a resilience to get the job done, Leslie is well on her way to a long-term, successful relationship with real estate. She is both SRS (Seller Representative) and CMAS (Certified Mountain Area Specialist) certified.  

Prior to real estate, Leslie’s entrepreneur spirit has led her on numerous successful business ventures. She has taken the same persistence, energy and passion that it took her to launch successful businesses into her new passion of real estate. In addition, Leslie is skilled in Aviation management as she has successfully managed a corporate hangar space housing the aircraft of some of the world’s biggest brands. At the end of the day, Leslie is known as a people person. Her sincere heart and deep desire to see the dreams of people fulfilled is uncanny.  

Leslie currently calls the mountains in Conifer, Colorado, home where she lives with her husband, Charles and their two boxers. They have two sons Dominick and Garrett. Leslie loves the outdoors, auto racing and rescuing horses and donkeys. Designations/Licenses: Seller Representative Specialist