Get pre-approved for a loan before you start looking for a home

I’m currently in the process of buying my first home, and one of the most confusing (and frustrating) parts of buying a first home was about the mortgage pre-approval letter. At what point in the process did I need to secure my pre-approval letter? Can I shop around for mortgage rates first? How many documents should I provide before a bank pre-approves me for a mortgage?

In the end, my pre-approval process turned out to be pretty straightforward. I wanted to make an offer on a house, my agent told me I needed the pre-approval letter in hand before I could make the offer, I contacted a local bank and I did it all in one afternoon.

Yes, being independent with a flexible schedule has helped; have a local bank nearby where I could both call and visit the person responsible for the pre-approval process absoutely aid; having years of tax returns saved on my laptop and ready to email my bank rep was a huge plus.

But do you know what would have been the smarter decision, overall? Obtain the pre-approval letter before you even start looking at the houses. That way, I wouldn’t have to rush through the process, anxious that someone else would bid on the house I wanted before I had a chance to do it all.

Money.com offers another reason why you may want to get your pre-approval letter before you start looking for housing: in a COVID-19 environment, in which agents and salespeople want to get in touch with as few people as possible, having your pre-approval letter ready to go shows that you take the process seriously and that could be your ticket to the houses you want to visit.

“Having a pre-approval letter has long been a preferred requirement for agents when submitting an offer, but having a pre-approval letter before looking at homes given the COVID-19 environment is a must. absolute, ”says Cara Ameer, a real estate agent at Coldwell Banker Vanguard Realty in Ponte Vedra Beach, Florida. “Salespeople and listing agents are careful about who comes into their homes and they want to make sure only those who are truly qualified walk through their doors.

My pre-approval letter process took a good three hours, including a multi-page online request and asked me to list the cash surrender value of every bank account, investment account, and asset I owned. Takis lying my time with the process and getting my documentation in order before I even started looking for houses would have been a lot less stressful, especially because the document the bank provided me at the end of the process was not technically a pre-approval letter; it was a prequalification letter, which is one step below the pre-approval letter.

(Basically, given our limited time and my desire to get this offer as quickly as possible, the bank could not state that I had been prequalified for the mortgage I was applying for, not that I had been pre-approved which was another big source of anxiety as someone with both an offer and a pre-approval letter might have a better chance of getting their offer accepted.)

In the end, I didn’t get that first home, even though it had nothing to do with pre-approval or pre-qualification letters. Someone else had a conditional offer on the property, and after we made our offer, the prospective buyer chose to go ahead with the purchase. Got the second house we bid for, and now all that is left to worry about is closing.