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How to Get Pre-approved for a Mortgage Loan

written by: Valencia Higuera•edited by: Jason C. Chavis•updated: 3/2/2011

Before beginning the home search, it's best to know how much you can afford. This way, you don't waste time viewing homes priced outside your budget. This article will offer tips on how to get pre-approved for a home loan.

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    Too often, home buyers submit bids for properties they can’t afford. Even worse, some home buyers have their bids accepted by sellers, but find it difficult to qualify for a mortgage loan. Before beginning your home search, it’s best to obtain a pre-approval from a mortgage lender. This way, you know exact what you’re able to afford.

    • Make credit improvements: To increase your chances of obtaining a loan approval, and to obtain the best rate possible on the mortgage, be sure to check your credit in advance. People with high credit scores generally receive the best rates. If your credit score is below 680, put off submitting your loan application, and take steps to boost your score. Consistently paying your bills on time or reducing your total debts can quickly add points to your FICO score.

    • Contact a mortgage broker: Some home buyers contact one mortgage lender and submit one home loan application. But if you want to find the best rate, you’ve got to compare loan offers. Use a mortgage broker and obtain quotes from three to four lenders.

    • Compare loan programs: There are several programs available to home buyers. Choose a no down payment home loan, a fixed rate mortgage, adjustable rate, etc. Brokers and lenders can suggest loan programs based on your situation. Still, it doesn’t hurt to do your own research. This way, you know the pros and cons of each type of home loan.

    • Submit your application and documentation: Once you’ve decided on a loan program, it’s time to submit your paperwork. A pre-approval is different from a pre-qualification. With a pre-qualification, mortgage lenders don’t review your personal information. Rather, they pre-qualify buyers based on stated information. With a pre-approval, buyers submit their financial statements (bank statements, w-2’s, tax returns, paycheck stubs, etc.) and lenders check their credit history.

    • Wait for a response: The pre-approval process is relatively quick, and most buyers receive a response within 48 hours. Upon review, lenders decide whether a candidate qualifies for a home loan; and they determine how much the buyer can afford to pay.