When Should You Get Pre-Qualified?

Certified Mortgage Advisor
NMLS 1701021
Published 
November 24, 2020

The right time to get pre-qualified

You've been looking in you're ready to purchase a home, but when should you get pre-qualified, this can feel like an overwhelming step. So let's break or break this down and figure out when you should actually start.

"Why" drives your timeline

First of all, the why is going to drive your timeline. Some people urgently need to move because of a job relocation or something's changing dynamically, maybe with your family or something's going on, where you need to start that process.

Now you might also be in a spot where it's more of a luxury, it's more of a want to move. And if you're in that spot, then you want to slow down a little bit more because the longer time that you have, the more you'll be able to make sure that your budget's in check, that you have the debt paid off. You have money saved up for your down payment and closing costs.

Collect all your loan documents NOW

So what I want you to do right now, No matter what stage you're in is go ahead and collect the documents that you need. So I have a link to a video up here. That's going to show you the documents that you need to get pre-qualified.

Avoid confusion, make sure your documents are in order

You want to get these documents in order things like your income documents, and W2's pay stubs. You want to get your bank statements, and driver's license. That's going to speed up the process. So when a loan officer asks for that, you don't have to go scramble for those documents.

15 Days before shopping for homes

So here's the rule. I think it's best to get pre-approved or pre-qualified. 15 days before you're ready to shop for a home.

Timeline is important

So this comes back to our timeline. You first have to understand when I actually want to start shopping for a home because that answer should be when I'm ready to purchase. Because often when you start shopping for a home, you'll most likely be placing an offer incredibly shortly after, especially in a really competitive market. You might see a home you like and place an offer on it that same day. Sometimes there isn't time to wait.

So if you're starting this process, Just be ready that when you shop for a home, you're actually ready to write an offer. So make sure your timeline lines up in that way. So then I want you to start 15 days before you're ready for that.

Time is important to think

What that's going to do is give you time to talk with the lender. Figure out your numbers, and then also take some emotional time to think through and understand how these numbers are going to fit into the rest of your life. Is the decision to move, going to be good for you because you want to sit with those numbers for a little bit. Sometimes what happens is people get approved and then they immediately go shop for homes and then they get under.

And then that's when people get cold feet, that's when people get buyer's remorse. So you want to have that 15-day period to be able to think through and sit with it and see if moving in these new numbers is going to be a good step for you moving forward.

Pre-qualification

So let's talk about the difference between a pre-qualification and a pre-approval. A prequalification is where you're doing an application and a lender is going just off of the information that you said.

So you told the lender, Hey, I make $70,000 a year in. I have this much saved up in my bank account and then they maybe do a credit poll. So there'll be able to give you a general idea of what you can afford.

Pre-approval

Pre-approval is when a lender is looking at all of your documentation and getting everything almost a hundred percent approved. So in this stage, the pre-approval most likely is going to take around a week and a pre-qualification can take about a day.

Good rating and enough savings, go for pre-qualification

So here's the difference between the two I would recommend, if you have high credit, you have savings set aside for your income. You can go with just a pre-qualification. You don't need anything more than that.

When to get a pre-approval

Now, if your credit's a little bit on the lower side, or you have some things that you're maybe thinking might be issued through the loan process, then go ahead and get a full pre-approval. Send all your documents to the lender, and get everything fully worked out so that, you won't run into any issues down the road.

What will make your offer stand out

The reason why we want to do a prequalification or preapproval is getting that letter from a lender is going to help your offer stand out more. When you actually submit an offer to a seller, it's going to show the seller that, Hey, we've done our due diligence. We have the funds ready to be able to close on a home.

Talk to a lender

So this is the flow of how it's normally going to work. First, you're going to talk with a lender. To get pre-qualified or pre-approved again, do this 15 days before you're actually ready to start shopping for homes with a realtor. So you're either going to talk to them over the phone or by email.

Do an application

I want you to do a full application, not just some little survey you did on an app. Not just saying, Hey, I make 70,000. How much could I afford? I want you to do a full loan application with a loan officer. That's going to help them see the most information to get even just a basic pre-qualification running.

Talk to a real estate agent then shop for a home

Then after you're approved, you can talk to a real estate agent. After that, you can shop for some homes.

Summary

To sum it all up, figure out first when you're ready to shop for home 15 days before that's what I want you to go ahead. Talk to a lender, get pre-qualified.

Talk with a loan officer
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Only for educational usage. All calculations should be verified independently. Win The House You Love LLC is not a lender, does not issue loan qualifications, and does not extend credit of any kind. This is not an offer to lend and should not be used to make decisions on home offers, purchasing decisions, nor loan selections. Not guaranteed to provide accurate results, imply lending terms, qualification amounts, nor real estate advice. Seek counsel from a licensed real estate agent, loan originator, financial planner, accountant, and/or attorney for real estate and/or financial advice. Read the full disclaimer here.