What Is Mortgage Preapproval, and Why Do You Need It Before Touring Homes?

It is a document from the lender (the bank or company that will lend you the money) after they have actually reviewed your situation: your credit, your pay stubs, your accounts and your tax returns. The letter says up to what amount they could lend you and on what conditions.

Notice the word "conditions." The letter almost always says final approval depends on things still to come, like the appraisal of the house you choose, or your situation staying the same until closing. It is a very solid step, but it is not the last one.

The names sound alike. They are not the same thing.

• Prequalification: a conversation or a form where you say how much you earn and how much you owe, and the lender gives you a ballpark. Very little gets checked against paperwork. It gives you an idea, nothing more.
• Preapproval: the lender reviews your documents and your credit. What the letter says is backed by paperwork.

When a seller gets your offer, the preapproval is the one that carries weight.

Four reasons, and every one of them protects you.

1. You know your real number. Not the one you imagine, or the one a friend told you. The one the lender gives you after reviewing your case.
2. Your offer gets taken seriously. The seller's agent almost always asks for the letter along with the offer. Without one, your offer falls behind the ones that have it.
3. You do not fall for the wrong house. It is hard to find the house, picture your kids in it, and then learn it is outside your number.
4. If something needs fixing, you find out in time. A credit issue or a missing document is much easier to handle before you have a house under contract than with the clock running.

1. First meeting. I explain the whole buying process and, if you want to keep going, I give you the list of documents you will need.
2. Second meeting. You bring your paperwork and the process with the lender begins.
3. The lender answers. They review your case and tell you what they can do.
4. Then, the houses. With the lender's answer in hand, we go looking with a clear number.

I walk with you through the loan step by step, start to finish. I help you find a lender who knows situations like yours, I explain what they are asking for and why, and I am there when the answer comes. But the lender approves the loan, not me.

The lender gives you the exact list, because it changes with your job and your situation. The most common items:

• A government-issued photo ID.
• Recent pay stubs.
• Tax returns and W-2 or 1099 forms from recent years.
• Bank statements.
• If you are self-employed, paperwork for your business.

One tip: gather them all at once. A complete file moves faster than one that shows up in pieces.

• Mixing up prequalification and preapproval. A phone conversation is not a letter backed by paperwork.
• Thinking the letter amount is what you should spend. The letter says how much you could borrow, not what you will be comfortable paying each month. The lender calculates the monthly payment, and you decide what lets you sleep at night.
• Moving your credit after the letter. Opening a new card or financing furniture or a car before closing can change everything. Here are the 7 mistakes that cost buyers the most in DFW.
• Keeping something from the lender. A job change or a large unexplained deposit comes out sooner or later. Better to say it up front.

A family comes to me after being told no somewhere else. They are nervous about asking again. The first thing we do is not look at houses. We sit down, go over their situation calmly, and look for a lender who works with cases like theirs.

Sometimes the answer is "yes, now." Sometimes it is "not yet, and here is what needs to happen." Both answers help, because now they know where they stand. If your case is about credit, here is how to prepare to buy a home starting from zero.

Does the letter lock me in with that lender?

No. You can change lenders. Just keep in mind that switching once a house is under contract can delay closing.

How long is the letter good for?

The letter is dated, and each lender says how long they stand behind it. If it expires while you are searching, it gets updated.

What if they tell me no?

A "no" almost always comes with a reason. A reason is something you can build a plan around. And sometimes another lender looks at the same case differently.

Do I need my down payment saved before preapproval?

The lender will review what you have in your accounts and tell you what your loan option requires. Bring that question to the lender at the start, so there are no surprises later.

Preapproval is not paperwork meant to slow you down. It is what lets you search calmly, make offers with confidence, and avoid surprises once you have found the house.

Have you been told no somewhere, or not sure where to start?

Tell me where you are and I will tell you which documents to gather first and what the next step is. No commitment, nothing to sign.

I'm Veronica Yeary, a real estate agent in Dallas-Fort Worth, CRS®, ABR®, SRS® and CIPS. I am not a lender, but I walk with you through the loan from start to finish so you always know what comes next.

Call or text me at 469-441-8890, or email veronica@veronicayeary.com.

469-441-8890 · Call or text · veronica@veronicayeary.com · Email