What Is Mortgage Pre-Approval?
Mortgage pre-approval is when a lender evaluates your finances—such as income, credit score, debts, and savings—and provides a conditional loan offer. Unlike pre-qualification, which offers an estimate based on basic financial details, pre-approval involves a more thorough review and carries more weight with sellers and real estate agents.
Once pre-approved, you'll receive a pre-approval letter that outlines how much you can borrow and the loan terms. This document shows sellers that you're a serious buyer who’s financially prepared.
Why Is Pre-Approval Important?
Gives You a Realistic Budget
Pre-approval helps you determine how much home you can afford. This prevents you from falling in love with properties outside your price range and helps narrow your search to homes within your budget.
Strengthens Your Offer
In competitive housing markets, sellers often prefer offers from pre-approved buyers. Having a pre-approval letter signals that you're financially qualified and ready to move forward, giving your offer an edge over others.
Saves Time
Since much of the financial review is completed during pre-approval, the underwriting process can move faster once your offer is accepted. This can help you close on your new home more quickly.
Find a Trusted Lender
Choosing the right lender is about more than just securing a loan—it’s about finding a partner who will advocate for your best financial outcome. At DNVR Lending, we go beyond the basics of pre-approval. We take a strategic approach to your mortgage options by:
- Running Multiple Scenarios:
We don’t just tell you what you qualify for; we explore different loan structures to find the best fit for your budget and long-term goals. Whether it’s evaluating different down payment options, comparing loan terms, or assessing potential rate buydowns, we help you make an informed decision.
- Reviewing Credit Opportunities:
Your credit score plays a major role in your mortgage terms, and we look for ways to improve it before finalizing your loan. We analyze your credit report for potential optimizations, such as paying down specific debts or correcting errors, which can sometimes lead to better loan terms.
- Helping You Navigate Your Budget:
Beyond just telling you the maximum you qualify for, we break down what your monthly payment will look like, including taxes, insurance, and HOA fees, so you can confidently choose a price range that aligns with your lifestyle.
- Providing Expert Guidance Every Step of the Way:
Mortgage guidelines and market conditions change constantly, but we keep you ahead of the curve. We explain your options in plain language, help you understand interest rate trends, and ensure you’re positioned for success.
At DNVR Lending, pre-approval isn’t just a checkbox—it’s a strategy. We work with you to ensure your financing aligns with your homeownership goals, so when you’re ready to make an offer, you do so with confidence.
How to Get Pre-Approved
Gather Your Financial Documents
Be prepared to provide:
- Proof of income (pay stubs, tax returns, W-2s)
- Credit history and credit score
- Bank statements to verify savings and assets
- Information on debts, such as loans and credit cards
Submit Your Application
Your lender will review your financial information to determine your loan eligibility. This includes evaluating your debt-to-income (DTI) ratio, credit score, and other factors. Once approved, you'll receive your pre-approval letter.
How Long Does Pre-Approval Last?
Pre-approvals are typically valid for 60 to 90 days. If you don’t find a home within that time, you may need to update your information and get re-approved. Changes to your financial situation, like new debts or major purchases, could also affect your pre-approval status.
What to Avoid During the Pre-Approval Period
To maintain your pre-approval status, avoid:
- Taking out new loans or credit cards
- Making large, unverified deposits
- Changing jobs or reducing your income
- Missing bill payments
Start Your Journey with Confidence
Getting pre-approved is an empowering step that puts you in control of your home search. It shows sellers you’re serious and ready while giving you a clear roadmap to homeownership.
At DNVR Lending, we specialize in guiding buyers through this crucial first step. Contact us today to start your pre-approval process and take the first step toward your dream home!