828.348.1907 Zachery@GoPrime.com
Pre-Approval Process: What Is It and Why Is It Important?

Written by Zachery Adam

December 6, 2021

pre approval process

Pre-Approval Process: What Is It and Why Is It Important? 

At GoPrime Mortgage, we always talk about how important it is to speak with an independent mortgage lender before starting your search for a new home. That’s why going through the pre-approval process is critical to the experience. But what is pre-approval, how do you get pre-approved, and what does it do for you as you buy a home? Here are some helpful things you need to know about getting pre-approved and its benefits.

Like an Annual Check-Up

Going to the doctor each year to ensure your health is still on point is always a good idea. And that’s kind of what the pre-approval process is like for your finances. When you talk to a lender about becoming pre-approved for a mortgage, they’ll look at some key factors, including:

  • Credit history
  • Credit score
  • Debt-to-income ratio
  • Employment history
  • Income
  • Assets and liabilities

They’re reviewing your information to give them an understanding of your ability to pay the loan once you’ve purchased a house.

Why Pre-Approval is Better than Pre-qualification

One term we know you’ve heard is “pre-qualified.” And many people use these words interchangeably, but they’re not. At GoPrime Mortgage in West Asheville, we only do pre-approvals, and there’s a reason for that.

The prequalification is simply an estimate based on what you say your income, assets and debts are which isn’t going to always give you or your lender the clearest picture of your finances. And it doesn’t give you a definitive number when you are ready to make an offer on a home.

With a pre-approval, you fill out the loan application and provide supporting documents like paystubs and bank statements, and your lender will go through the entire underwriting process. This way, you know your budget and whether you will be approved for the loan to help you in the offer and negotiation process.

When Should You Get Pre-Approved?

Pre-approvals do expire, which is why you want to talk to a lender to determine the best next steps for your process. Getting pre-approved can help you identify problems in your finances that may make it difficult to get a mortgage and allow you to fix any issues before you make an offer on a home.

Many experts recommend that you go through the pre-approval process up to a year before looking for a home. You will be able to make any improvements before the next pre-approval process, and you can save money for a down payment or closing costs.

Most mortgage pre-approval letters will expire within 30 to 90 days because your financial picture can change rapidly. Once that happens, you’ll need to go through the process again.

What to Expect in the Process

It’s helpful to know what to expect in the pre-approval process. Various factors can make a few differences, but for the most part, you’ll begin with filling out an application that includes all of the vital information for determining your financial picture, including your social security number. If you’re buying with another person, both of you will have to fill out the information.

A standard application will include:

  • The type of mortgage and terms
  • The purpose of the loan
  • Your identifying information, including social security number, date of birth, and address history
  • Employment information and history
  • Monthly income and combined household expenses
  • Assets and liabilities
  • Estimated purchase price and down payment
  • Declarations regarding judgments, liens, bankruptcies, and foreclosures in the past

Regarding the purpose of the loan, that will cover if it is a primary, secondary, or investment property or whether it’s for an existing home or new construction.

There are a lot more details for each of these categories, which is why we always encourage you to talk to an independent mortgage lender as early as possible in your process. We can work with you to determine a strategy moving forward and help you position yourself to buy the house you love in Western North Carolina.

And keep in mind that sellers are more willing to negotiate with buyers who can prove that they can get financing to buy the home.

What Documents Do You Need?

You’ll also want to be prepared with the proper documents throughout the pre-approval process. A good reference is this Mortgage Document Checklist which includes:

  • 60 days of bank statements
  • 30 days of pay stubs
  • The previous two years of form W-2 tax statements
  • Income tax returns
  • Asset account statements, including retirement, stocks, etc.
  • Picture ID

If you’re divorced, you will also need those papers. And if you’re receiving a gift for your down payment from a relative, a gift letter. If this is the case, your lender will give you guidance for what information to supply.

Pre-Approval Decisions

Once your application for pre-approval is submitted, you will receive one of two decisions:

  • Pre-approved
  • Denied outright

If you’re denied, your lender will need to explain why and may point you toward resources to help you become pre-approved in the future.

This is one of the reasons it’s recommended to get pre-approved six months to a year ahead of the serious buying process. If there are issues, you’ll have a chance to sort them out and apply again when you’re ready.

Call GoPrime in West Asheville

GoPrime Mortgage in West Asheville is here for you. Talk to Zachery Adam and his team to find out how to get pre-approved and take the next steps toward owning a home in the Western North Carolina area. Call us today to learn more.

Do you want to know about the process to apply for a mortgage?  GoPrime Mortgage in West Asheville is here to help. Call us today at 828-348-1907 –Zachery Adam at GoPrime Mortgage in West Asheville.

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Zachery Adam

Zachery Adam

Branch Manager, Loan Officer

"What we do is so far more important than lending and buying houses. We are in the business of facilitating dreams and honoring the start of a new home.” 

Teona Rodriguez

Teona Rodriguez

Marketing

"“I wake up every morning with incredible appreciation. I love what I do.” ” 

Jordynn Webb

Jordynn Webb

Loan Officer Assistant

"My eventual goal is to become a loan officer. I love working within the community and being a part of the GoPrime Mortgage team.” 

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