Do You Need Mortgage Preapproval Before You Make an Offer on a House?

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In real estate, timing is everything. Among the most important steps in this is getting preapproved for a mortgage.

Do you really need to get preapproved for a mortgage before making an offer on a house? The short answer is, in most cases, yes. Here’s a closer look at mortgage preapprovals and why it’s a necessary part of the the homebuying process.

Read: 3 Things You Must Do When Your Savings Reach $50,000

An Overview of Mortgage Preapprovals

Generally, it’s good to get that preapproval before making an offer on a house. It shows sellers that you’re a serious buyer and you have the means to purchase a home.

It also helps you gauge how much house you can afford; that way, you can select the right type of house in your budget. In competitive housing markets, being preapproved can make your offer more appealing compared to those from buyers who aren’t.

Mortgage preapproval is a process where a lender evaluates your financial situation and determines how much money they are willing to lend you for a mortgage. This step is different from prequalification, which is more of an estimate and less binding.

To begin the process, the lender will take a look at your credit score, income, debts and assets to get an accurate overall picture of your finances and homebuying budget.

Why Mortgage Preapproval Matters

Mortgage preapproval plays a pivotal role in home buying for several reasons, including:

Gaining a Competitive Edge

When you’re competing with several buyers for a house, a mortgage preapproval can make your offer stand out. It tells the seller that you’re not just interested but also financially prepared and capable of buying a home, which can give you a distinct advantage over buyers who haven’t.

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Knowing How Much You Can Spend

By getting preapproved for a mortgage, you’ll know just how much money you can put toward buying a home. This helps with narrowing down your search to properties that are within your budget–a major time saver.

Streamlining the Buying Process

With preapproval, the mortgage application process is nearly complete. Once you find a house and make an offer, the loan process can move faster since the lender already has most of the information they need.

Avoiding Disappointment

Falling in love with a home that’s out of your budget can be heartbreaking. Preapproval helps avoid this by setting a clear budget from the start.

Strengthening Your Offer

Sellers are more likely to accept an offer from a buyer with preapproval. It reassures them that the sale is less likely to fall through due to financing issues.

How To Get Preapproved for a Mortgage: 5 Steps

The process of getting preapproved for a mortgage involves several steps:

  1. Gather your documents. You will need to provide financial documents, including recent pay stubs, tax returns, bank statements and information on existing debts.
  2. Check your credit score. Your credit score is an important part of the process. A higher credit score can often mean better mortgage terms, such as lower interest rates. It’s good to know your credit score beforehand, and thus, better your chances of approval.
  3. Shop around for lenders. Don’t settle for the first lender you find. Compare offers from multiple lenders to find the best rates and terms.
  4. Complete the application. Once you choose a lender, fill out their application and submit the required documentation.
  5. Wait for approval. The lender will review your application and make a decision. If approved, you’ll receive a letter stating the amount you’re approved for.
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What You Should Know Before You Apply for a Mortgage

  • Preapproval is not a guarantee. Remember, a mortgage preapproval is not a final loan approval. Changes in your financial situation or interest rates can affect the final approval.
  • Preapproval letters can expire. Most preapproval letters are valid for 60 to 90 days. If you haven’t made an offer in that time, you may need to go through the process again.
  • Impact on credit score: The preapproval process involves a hard credit inquiry, which can temporarily lower your credit score.
  • Stay financially stable. Avoid taking on new debts or making significant financial changes between preapproval and closing on a home.

Final Take

While it’s not always mandatory, getting preapproved for a mortgage before making an offer helps you figure out your budget and shows sellers you mean business. With the right preparation and understanding of the preapproval process, you’ll be well on your way to securing the home of your dreams.


Here are answers to some frequently asked questions to about the mortgage preapproval process.
  •  How far in advance should I get preapproved for a mortgage?
    • Ideally, you should get preapproved for a mortgage while you're starting the house hunting process--to be safe, typically a few months before you plan to make an offer. This allows plenty of time to address financial issues--a blemish on your credit report, for example-- and to shop around for the best mortgage terms. Remember, preapproval letters are usually valid for 60 to 90 days.
  •  Is it worth getting preapproved for a mortgage?
    • Yes, getting preapproved for a mortgage is worth it. You'll know what to anticipate as far as budget and it paints the picture that you're a serious buyer. It also speeds up the buying process, and increases your chances of a successful offer, especially in competitive markets.
  • How bad does a mortgage pre approval affect credit score?
    • A mortgage pre-approval typically involves a hard credit inquiry, which can temporarily lower your credit score by a few points. However, the impact is usually minor and short-lived. If you shop for mortgages within a short period, typically 14 to 45 days, multiple inquiries are generally seen as a single inquiry, which means the impact to your credit score is fairly minimal.
  • What is a mortgage preapproval?
    • Mortgage preapproval is a process where a lender evaluates your financial details, like your income, debts and credit score, to determine how much they can lend you for a house. It's an important step in house hunting, giving you a clear budget range and showing sellers that you're a serious buyer with the financial backing to purchase a home.
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Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.


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