Where to Get Pre-approved for a Home Loan?

You want to buy a home and need a mortgage loan to do it. Before you go shopping for homes, it's wise to learn exactly how much home you can buy. Getting preapproved for a mortgage loan will give you this information. To get the best interest rate and terms, you can seek preapproval with any mortgage lender licensed to do business in your state.

Preapproval Basics

When mortgage lenders preapprove you for mortgage loans, they tell you exactly how much money they are willing to lend you. A preapproval differs from a prequalification in an important way. During a prequalification, a lender will determine how much of a mortgage loan you can afford, but won't verify your income or debts. In a preapproval, you'll have to provide your lender with proof of your income, debts and assets. Armed with this financial information, your lender will determine how large of a monthly mortgage payment -- and how large of an overall mortgage loan -- that you can afford.

Getting Preapproved

You can get preapproved with any mortgage lender that can legally do business in your state. Many borrowers call several lenders, first asking them about their interest rates and fees. By shopping around, you can increase your chances of getting a mortgage loan at the best price. Once you settle on a lender, ask for a preapproval. Your lender will request that you send copies of such financial documents as your last two paycheck stubs, last two months worth of bank statements and last two years income-tax returns. Your lender will use these documents to verify your income. You might also have to send copies of your credit-card statements, most recent car-loan payment, retirement-account statements and other documents that show how much you make and how much you owe. After studying your documents, your lender will send you a preapproval letter stating how many mortgage dollars it is comfortable lending you.


By knowing exactly how much mortgage money is available to you, you won't waste time looking at homes that are out of your price range. And if you are preapproved, you are a more attractive buyer. In a bidding war over a home, the seller is more likely to choose buyers who have already been preapproved for mortgage financing than those who have not. Preapproved buyers are not as likely to drop their offers because they can't get the money they need to finance a home purchase.

After the Preapproval

Even if you receive a preapproval letter from a mortgage lender, you don't have to work with that lender when you've found a home and are ready to take out a loan. You can still shop with other lenders for better rates and fees. If you don't find any better offers, you at least know that you can get mortgage financing from the lender that has conditionally preapproved you. Also keep in mind that the preapproval usually expires after 90 days and may have to be renewed if you have not settled on a home to buy.