{"id":17677,"date":"2020-07-09T10:28:43","date_gmt":"2020-07-09T17:28:43","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=17677"},"modified":"2024-05-30T10:55:35","modified_gmt":"2024-05-30T17:55:35","slug":"buyer-how-to-get-pre-approved-for-a-mortgage","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/buyer-how-to-get-pre-approved-for-a-mortgage\/","title":{"rendered":"Know How to Get Pre-Approved for a Mortgage with This Step-By-Step Guide"},"content":{"rendered":"

Few things in life involve the level of commitment buying a house requires \u2014 or the amount of paperwork<\/a>. But the first step isn\u2019t at the front door of an open house<\/a>. In markets where houses usually don\u2019t sit for long, by the time you\u2019ve secured your financing and returned to make an offer, that dream house has probably already been sold.<\/p>\n

That\u2019s why a successful homebuying journey should start in a lender\u2019s office, not with a call to your real estate agent. Getting preapproved for a mortgage<\/a> is the first step any would-be homebuyer should take. That\u2019s when you\u2019ll find out how much house you can afford, which will dictate everything else you do.<\/p>\n

So how do you get preapproved for a mortgage?<\/p>\n

\"A<\/a>
<\/a> Source: (Lukas \/ Pexels)<\/figcaption><\/figure>\n

Preapproval preparation<\/h2>\n

Before calling (or paying a visit to) your lender, there are a few preliminary steps you should take.<\/p>\n

Check your credit report<\/h3>\n

Each of the three major credit bureaus \u2014 Equifax, Experian, and Transunion \u2014 will give you a free credit report at least once a year. You can request yours online at www.annualcreditreport.com<\/a>, or you can call 1-877-322-8228, according to the Consumer Financial Protection Bureau<\/a>.<\/p>\n

After you get your hands on the report, look through it carefully, paying particular attention to the \u201cnegative information\u201d section. Look for mistakes, such as the spelling of names, addresses, and employer information.<\/p>\n

Also, be on the lookout for any accounts you don\u2019t recognize. You can submit any corrections or disputes online or in writing.<\/p>\n

Finally, note that requesting your credit report does not affect your credit score. Speaking of which\u2026<\/p>\n

Check your credit score, too<\/h3>\n

It\u2019s important to note that credit reports don\u2019t include your actual credit score<\/a>. But uncovering this number \u2014 which can range anywhere between 300 and 800 \u2014 is much easier than it was even in 2015.<\/p>\n

This score might be the single most important number you need to secure a mortgage preapproval. According to a 2013 survey of mortgage originations<\/a>, nearly two-thirds of mortgages went to borrowers with a score over 720. And not only will your score determine whether you get a mortgage at all, it will also determine what interest rate you can get, which can translate into a huge difference in a monthly mortgage payment.<\/p>\n

Most credit card companies offer access to your credit score for free if you have an account with them. There are also a host of third-party services, most of which will provide an unofficial credit score without charging you anything. You can also get your FICO score at myfico.com<\/a>, for a fee, or from any of the credit three major credit bureaus.<\/p>\n

If your score is lower than you \u2014 or your lender \u2014 would prefer, the best thing you can do is pay down your debt and keep making any payments on time. Late payments and high credit utilization are the two single biggest drags on a credit score.<\/p>\n

Save some money<\/h3>\n

There are several schools of thought when it comes to how much money you should have in a savings account<\/a> before talking to a lender. Some suggest saving 10% to 20% of your monthly income for a year. Others advise having two months of mortgage payments in the bank before trying to get a mortgage. Then there\u2019s also the camp that swears by shoring up three months of total living expenses. And these amounts are in addition to what you have saved for a down payment, which can range from anywhere between 3% and 20% of the home\u2019s purchase price.<\/p>\n

The bottom line: Have a few thousand dollars, at least, in savings before asking a lender to determine if you will qualify to buy a house. It not only shows you can afford a mortgage; it proves you have the discipline to make it happen. An empty savings account \u2013 or a complete lack of one \u2014 is not a good look for a lender.<\/p>\n

It\u2019s these two things, credit and savings, that tend to trip up most buyers, according to Carrie Jass<\/a>, an agent who\u2019s been serving the Naperville, Illinois, area for seven years.<\/p>\n

\u201cThe biggest hurdles I\u2019ve seen are no credit or poor credit history, or they don\u2019t have enough for a down payment<\/a>,\u201d Jass explains.<\/p>\n

Get your paperwork together<\/h3>\n

Buying a house is a complicated financial transaction, and it starts with getting pre-approved for a mortgage. Your lender is going to ask you for reams of documents, so start rifling through the filing cabinet and get together:<\/p>\n