Before you begin looking at listings of homes for sale, find out how much of a loan you’re qualified to receive. Then, you can shop with confidence. At New Home Inc., we’re often asked, “How long does it take to get pre-approved for a mortgage?” Here’s what you need to know.

What is mortgage pre-approval?

Mortgage pre-approval is a simple but important step in preparing to buy a home. Often, with a few minutes on the phone with a mortgage lender, you can determine if you qualify for a loan and approximately how much you can borrow. The lender will assess your financial information—without a deep dive—to give you a reasonable estimation of your borrowing potential and options.

Why should I get pre-approved for a mortgage?

Let’s say you’re shopping for a new home. You find the perfect one and make an offer, which is accepted. Then you talk to a loan officer, who gives you the sad news that you don’t qualify for the amount of home loan you need. Or you discover that you must pay a higher interest rate than you expected because of your credit score, which puts the monthly payment out of your reach. And in the worst case scenario, you can’t get a loan at all.

If you had talked to a lender before you began shopping for a new home, you’d have the confidence to know how much you can afford, the estimated monthly payment, and how much you should expect to provide as a down payment. You avoid financing surprises after you submit your offer! 

When you have been pre-approved for a home loan, you receive a letter stating that fact, along with the amount you can expect to receive as a loan. This letter should be mentioned to the seller, because it tells them you are a serious buyer who is qualified to buy their home. Be sure to always submit the pre-approval letter with your offer.

Is there a difference between pre-qualification and pre-approval?

The terms “mortgage pre-approval” and “mortgage pre-qualification” are often used interchangeably by some lenders. There IS a difference in the meaning, however, so you should be clear on what you’re requesting and receiving.

Mortgage pre-qualification is an informal estimate of your borrowing potential. The lender will do a credit check and ask you about your current employment and financial situation, but does not fully assess your financial situation. Mortgage prequalification is helpful when you’re casually touring properties but not prepared to make an offer. 

Mortgage pre-approval refers to a process that requires verification of your employment, income, bank accounts, and credit score. You should plan to request mortgage pre-approval before you start seriously looking at homes with the purpose of buying one.

In each process, you’ll have an idea of the amount of loan you might be approved for, the interest rate, and loan program—like programs for first-time homebuyers, veterans and military service members, and homebuyers with certain credit scores.

While neither credit assessment guarantees you will get the loan you want, the decision of mortgage pre-approval gives you a better picture of your ability to finance the purchase of a home with the information you’ve provided. If things change—like you lose or switch your job or incur additional debt—you’ll need to talk to your lender to see if you still qualify for the loan you’ve discussed. Think of the pre-approval as a snapshot of your buying power at the time you request the decision.

What do I need to provide for mortgage pre-approval?

Most of the mortgage pre-approval information can be provided over the phone and electronically. Be prepared to provide the following information to a lender:

• Photo identification: driver’s license, passport, or state-issued identification
• Social security number (for credit check)
• Employment information: current job, employer, and how long you’ve worked there
• Copies of recent pay stubs (preferably within the past 30 days) or electronic copies of automatic deposits of your paycheck
• Income tax returns for the past two years
• W-2 forms from the past two years
• Bank account information (bank name, routing number, account numbers)
• Investment account statements
• List of monthly debts, including rent or mortgage, credit cards, loans (e.g., car, student)

If you’re using money that has been given to you for the down payment, you will need a letter from the person or company that states you will not be required to repay the amount. The lender wants to be sure that you’re not responsible for repaying this gift.

Current renters might be asked for a letter of reference from their landlord that confirms you pay your rent on time.

How long does mortgage pre-approval take?

So, how long does it take to get pre-approved for a mortgage? Now that you understand what’s involved in mortgage pre-approval, you can prepare all the documents needed. In many cases, you’ll get your response in a day or two. You’ll receive a confirmation letter shortly after.

If you don’t receive approval, ask the lender what you need to do in order to qualify for the home loan you want. You might need to come up with a larger down payment, increase your credit score, pay off some credit cards, or show a longer period of consistent employment. 

Should I talk to more than one lender?

Absolutely! Home loans are subject to approval, but some lenders are more flexible and more willing to work harder than others. One lender might offer a loan program that another does not. One might be able to secure you a better interest rate. Reach out to your local banks, credit union, and online lenders to fully explore your options.

What is a preferred lender?

If you’re looking at new construction homes, ask the builder if they have a preferred lender. This home loan professional has worked extensively with the builder and understands the unique process of financing a home that is under construction. For example, a preferred lender knows what documents need to be processed at particular times in order to avoid delays.

When you use a builder’s preferred lender, you might enjoy benefits that other financing companies don’t offer:

• Closing cost credits
• Incentives, such as a sales price reduction
• Rate locks
• Competitive interest rates
• Financing options, like a rate buydown
• Greater chance of loan approval

Start shopping for a new home near Raleigh, NC

How long does it take to get pre-approved for a mortgage? Faster than you think! So, get started right away. Make a list of lenders and start calling them.

Have you considered looking at new homes for sale near Raleigh, NC? New Home Inc. is building communities of brand new townhomes and single-family homes in some of the most sought-after and affordable Raleigh suburbs. 

Our new construction homes showcase New Home Inc.’s “Future-Proof” approach to designing and building modern homes. Our innovations provide homebuyers with more comfort, convenience, safety, and security. We include smart automation technology, healthy home and energy efficiency advances, and design features that other builders either don’t offer or consider an upgrade.

• We offer a fully enclosed, secured Smart Home Delivery Center that protects your packages. The delivery person uses a one-time code to access the space. The smart lock automatically relocks and your package is safe.
• Our smart home automation package—a standard feature in each townhome and single-family home—makes it easy to move in and connect all of your smart devices. The package provides a control panel, whole home network panel, smart door lock, smart thermostat, and video doorbell. You start with the right smart home technology and with our package, and it’s easy to add more!
• If you have an electric vehicle, you’ll appreciate the forethought of the included electric vehicle charging station rough-in. All the behind-the-wall work is done, making it simple to finish the station.
• We designed an oversized kitchen island that has seating on 3 sides, not just 1 or 2. By removing the elevated breakfast bar you’ll often find in outdated homes, we provide large serving, dining, and workspace.
• New Home Inc.’s “messy kitchen” service pantry expands your work and storage space. This separate nook has cabinets, countertops, and the option of a sink, mini-fridge, dishwasher, wine chiller, and other features that reduce the traffic and messes in your kitchen.
• The included clutter-free drop zone is outfitted with a hall bench and cubbies to maintain order.
• Our pet spaces give extra love to your furry family members, like a nook under the stairs and a grooming station, if you want them.

New Home Inc. also offers incentives that make buying a new home more affordable. We’ll help you take advantage of low interest rates so you can get more for less. We work with our preferred lender to give you the rate buydown option that lowers your interest rate at no cost to you—and, of course, to get pre-approved for a mortgage!

Look at New Home Inc.’s communities of new homes for sale near Raleigh, NC, in the suburbs of Lillington, Fuquay-Varina, Smithfield, and Willow Spring. Get a bigger yard, more features, and better financing along with the added value of your new construction home. Contact us to start and finish your home shopping journey with New Home Inc.