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Understanding Why You Should Get Pre-Approved For A Loan
You’ve likely heard the term mortgage pre-approval, but it may be unclear what it means, what the process involves, or how to obtain it. While mortgage bankers might be familiar with the term, many home buyers are not fully aware of its significance or the steps required to get pre-approved for a home loan. If this is your first time buying a home, it’s crucial to understand what mortgage pre-approval means, the steps involved in the process, and how it will impact you.
Explore Your Rates Through RocketWhat Does Home Loan Pre-Approval Mean?
Home loan pre-approval indicates that you may qualify for a loan. Here are a few key points to understand about mortgage pre-approval before you begin:
Understanding the Difference Between Pre-Qualification and Pre-Approval:
Pre-qualification and loan pre-approval are quite different. Pre-qualification provides a general confirmation that you meet the basic criteria for a loan and doesn’t require personal information or documentation.
Pre-approval affects your credit score
In your pre-approval application, the lender will perform a hard credit check to assess your creditworthiness for a loan. This hard inquiry may temporarily impact your credit score, but the effect is usually short-lived.
Mortgage Pre-Approval Doesn’t Guarantee Funding
This is crucial to understand from the start: many home buyers mistakenly believe that pre-approval guarantees they will secure a loan from the lender. However, home loan pre-approval only indicates that you are in a favorable financial position to explore home purchases. It does not guarantee or commit the lender to providing a loan.
How to Get Pre-Approved for a Mortgage
To get pre-approved, you’ll need to complete a loan application, provide the necessary documents, verify your income status, and wait for the lender to review your information. While this process can be quick—some lenders offer same-day pre-approval—many now offer the convenience of online pre-approval, allowing you to complete it without visiting an office or enduring a lengthy application process.
What Are My Chances of Mortgage Pre-Approval?
The chances of getting pre-approved for a mortgage online depend on several factors, including your credit history, employment status, debt-to-income (DTI) ratio, and financial assets.
Why Should I Pursue Home Loan Pre-Approval?
Before diving into how to get pre-approved for a mortgage, you might be wondering why it’s worth the effort. A mortgage pre-approval letter provides several advantages for prospective buyers, including:
Being taken seriously: In today’s economy, agents and sellers are cautious about potential buyers. They are unlikely to invest time in those who aren’t serious. A home loan pre-approval letter demonstrates that you are genuinely interested, have engaged with a lender, and likely have the financial means to secure a mortgage. Additionally, a pre-approval letter makes you more competitive, as sellers and agents are more likely to prioritize your offer over others if multiple bids are on the table.
Highlights weaknesses: Even if you don’t receive a pre-approval for a home loan, the process is still beneficial. It can reveal areas where you may need improvement, such as your credit score, financial status, or employment situation. If your application is denied, the lender will provide feedback on the reasons for rejection. This information allows you to address credit issues, resolve any discrepancies, and enhance your overall financial profile, making you a more attractive candidate for future mortgage applications.
For this reason, financial advisors suggest seeking mortgage pre-approval six months to a year before you start house hunting, even though pre-approval typically lasts only three months. This advance preparation provides valuable insight into your borrowing status, ensuring that by the time you are ready to buy, your credit will be in excellent shape.
Refine the search: A pre-approved home loan helps you refine your search by specifying the amount or range for which you are approved. This allows you to more easily find a home that fits within your budget.
Explore Your Rates Through New American FundingMortgage Loan Rates as of July 2025
| Mortgage Type | Average Mortgage Rate Today | Average Mortgage Rate Yesterday | Mortgage Rate 3 Months Ago |
| Purchase 15-year fixed | 5.656% | 5.656% | 6.414% |
| Purchase 30-year fixed | 6.656% | 6.656% | 7.229% |
| Refinance 15-year fixed | 5.562% | 5.562% | 6.375% |
| Refinance 30-year fixed | 6.154% | 6.154% | 6.898% |
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