What is a Mortgage Pre-Approval Process?

written by Jennifer Chiongbian
12 · 07 · 20

Congratulations! You have decided to take the first step to first-time homeownership. The mortgage pre-approval process will be the first important step you need to take in order to qualify for a home loan.

A mortgage pre-approval is a necessary evaluation of a buyer’s ability to qualify for a home loan purchase and how much they can afford. 

The loan officer just looked at your debt, credit history, and income but does not guarantee you will get a mortgage.

Steps Before You Jump Right Into The Pre-approval Process

  • Pull your credit scores from the three major credit bureaus.
  • Know your credit scores and get them in shape.
  • Check for discrepancies and clear them up.
  • Pay off any high-interest debt or balances nearing credit limits.
  • Understand the types of lenders such as credit unions, mortgage brokers, mortgage bankers, savings and loans, etc.

Find the Right Lender for You

Shop around. Bring the right docs with you for your appointments. 

  • 2 year’s tax returns, W-2’s or 1099’s
  • All account information such as checking, savings, and investment accounts
  • Employer information or a letter of employment stipulating salary, tenure, and position
  • The down payment amount and the source of these funds

Your chosen lender will be pulling your credit report during the appointment and will see your total debt obligations. You can bring your own information on this, which will be more in real-time.

Once you have a few quotes, you will be able to compare the best lender who fits your needs. 

Pay attention to the total dollar amount of the interest rate over the life of the loan. This can save you some big money.

Pre-approval vs. Pre-qualification Letter

Despite a mortgage pre-approval being a basic evaluation of a buyer’s ability to qualify for a home loan, this doesn’t guarantee an interest rate. This can be done over the phone or online and is usually free.

This is just a first look into your potential as a borrower and an offer from the lender, NOT a commitment, to lend you a specific amount. 

A pre-qualification letter carries much more weight and requires much more paperwork and vetting. You will be completing a mortgage application package along with all the required documentation. 

This letter will give you a better idea of what the interest rate will be. Some lenders will even allow for a loan lock letter, which locks in your interest rate between the offer and closing period. Assuming that there have been no significant changes to your credit scores, debt to income ratio, or information on the application package. 

The pre-qualification letter is a powerful negotiating tool to use on sellers. This signals your viability to purchase a home loan and one step closer to obtaining a loan with a substantial lending institution commitment.

In short, the difference between a pre-approval and pre-qualification letter is the difference in depth of lender research.

Final Thoughts

Before you begin the process of finding a real estate broker, make sure your finances are in line. Get a pre-approval or pre-qualification letter so you understand what you can afford, discuss your budget, then begin the fun part of looking around for your perfect home.


Jennifer Chiongbian


Consectetur adipiscing elit dapibus, vulputate in donec tempor ultricies venenatis erat, aliquam posuere urna habitant.