How a Mortgage Pre-approval Gives You a Home Buying Advantage

When starting your house search, it’s crucial to give your offer every advantage possible. That’s why the home loan experts at Bison State Bank emphasize the importance of a loan pre-approval. 

The best first step for the home buying journey is a loan pre-approval from a trusted lender, like Bison State Bank. Whether you’re in a relaxed or highly competitive buying market, a pre-approval is a great tool that can put you ahead of the competition. Some selling agents won’t even accept a showing if the prospective buyers aren’t pre-approved!

Continue reading to learn more about mortgage pre-approval and why it’s an important part of the home buying process. You can also always reach out to Bison State Bank to speak with a friendly and knowledgeable home loan expert about your home buying journey. 

What is a mortgage pre-approval?

Simply speaking, a mortgage pre-approval is a preliminary evaluation of your potential buying power. With this information, buyers have a better understanding of what level of house they can afford, and realtors can adjust their showings to better fit your needs. 

How Much Home Can I Afford?

How does pre-approval work?

When seeking a mortgage pre-approval, potential borrowers need to be prepared to submit some important documentation. With that information and other important details (like your credit score and other financial records) a loan officer can provide borrowers with hard numbers on how much house they can afford. 

Pre-approval vs. Pre-qualification

The terms “pre-approval” and “pre-qualification” are both used so often in real estate, they can almost seem interchangeable. That’s not quite the case, however.

A mortgage pre-qualification is based completely on data submitted by the consumer. A loan officer will take down some basic information (like your income, debt, assets, etc.) and give you a rough estimate of how much you can borrow. These numbers aren’t set in stone, and the estimated loan amount is far from a sure thing.

A mortgage pre-approval is typically the next step. You will provide your lender with hard information about your financial history, essentially submitting your official mortgage application. The lender will then check your credit history and other financial records to provide a specific amount of how much you can borrow. 

The loan officers at Bison State Bank only deal with mortgage pre-approval. That way, our clients have a full understanding of their borrowing power. When they are ready to submit an offer on a home, we can hit the ground running with submitting your loan application to underwriting. 

When is the best time to get pre-approved?

It’s never too early to start looking into pre-approvals if you’re considering jumping into the housing market. Pre-approvals last for 90 days, so you don’t have to feel rushed when looking for the perfect home or shopping for the best loans. 

A pre-approval also gives you a whole picture of your purchasing power. That helps guide you in the right direction for your housing search. We want to avoid any heartache associated with falling in love with a house you ultimately can’t afford!

Why is a mortgage pre-approval important?

On top of the benefit of knowing your purchasing power, a pre-approval is important because it opens the door for your home buying search. Many selling real estate agents won’t even show the house to a prospective buyer who doesn’t have a pre-approval. 

A pre-approval and a good loan officer, like the ones at Bison State Bank, can put your home search on the right foot. When we are involved with the search from the start, it lets us help make sure your home search is going smoothly. With a mortgage pre-approval from Bison State Bank, you’ve already gone through the mortgage application process, so you have everything you need to consummate a transaction. 

Make your offers stand out

When an agent knows you’re ready to buy at the drop of a hat, it makes your offer stand out among the rest. There are many cases where a selling agent will call one of our home loan officers to inquire about a pre-approval. When they are assured that your offer is sitting on a strong foundation, it helps win deals because the agent knows someone has actually looked at the hard numbers. 

Where can I get mortgage pre-approval?

Mortgage pre-approvals are available from most home loan officers, but it’s important to find the right loan officer for your needs. Even if you receive pre-approval from one loan officer, it doesn’t hurt to shop around and see if there are better rates, or even bigger loans available from other lenders. 

The professional loan officers at Bison State Bank are dedicated to the satisfaction and happiness of our clients. We are here to guide you through the landmines of buying a home, and we want to support you throughout the entire process. Our officers are readily available when you need us, even on nights and weekends. A mortgage pre-approval from Bison State Bank is the first step to a better future. 

Mortgage pre-approval checklist

When searching for a pre-approval, having certain documents readily at hand can make your process smoother. Things to gather include:

  • Proof of income 
  • Proof of assets
  • Credit score
  • Employment verification
  • Identification (like a driver’s license)

There are other documents your lender may need to complete the pre-approval, but once completed you’re just a few steps away from pre-approval to mortgage application. 

Mortgage Pre-approval FAQ

There’s typically a lot of questions we are asked about the pre-approval process, so here are a few answers to some of the most common questions we receive. 

How long does a pre-approval last?

Most mortgage pre-approvals are issued for 90 days, though some lenders do 60- or 30-day pre-approvals. Make sure you ask your lender how long your pre-approval lasts, so you stay on track with your housing search. 

What happens if my pre-approval expires?

Your pre-approval only expires because your information needs to be updated. Banks and lenders typically prefer to have up-to-date information going back at least 90 days, so once you’ve hit that threshold, you will likely need to re-apply for a pre-approval. Many things can change over 90 days. You could start a new job, pay off debt, or other actions that might affect your financial situation. 

What is the difference between pre-approval and pre-qualification?

The biggest difference between pre-approval and pre-qualification is how much information you present. A mortgage pre-qualification is based completely on data submitted by the consumer. A loan officer will take down some basic information (like your income, debt, assets, etc.) and give you a rough estimate of how much you can borrow. 

A mortgage pre-approval is typically the next step. You will provide your lender with specific information about your financial history, essentially submitting your official mortgage application. The lender will then check your credit history and other financial records to provide a clearer picture of how much you can borrow. 

Pre-qualifications are essentially estimates, and the numbers aren’t set in stone. That’s why we like to deal with pre-approvals, that way we can turn those hard numbers into an actual loan faster, which gives you a leg up on the competition. 

Does a pre-approval affect my credit score?

When a lender requests certain financial information, like your credit report, it is known as a hard inquiry. This might have a slight effect on your credit score, but it shouldn’t be a drastic change that will affect your loan. 

Should I settle for my first pre-approval?

When you’ve received a pre-approval from a lender, they’ve likely done a hard inquiry on your credit score. There is a grace period after this hard inquiry for other lenders to also pull your credit without penalty, so it’s actually a great time to shop around for the best rates and loans you can afford. 

Does pre-approval really give me an advantage?

Absolutely it does! Not only does a mortgage pre-approval provide important information about how much you can afford to borrow, it gives you a leg up on other potential homebuyers. Some realtors won’t even show a house if you’re not already pre-approved. 

With a mortgage pre-approval from Bison State Bank, you’ve already gone through the mortgage application process, so you have everything you need to consummate a transaction. 

What’s your #1 advice for mortgage pre-approval?

Our best advice when it comes to mortgage pre-approval is to actually get one before entering the housing market. A pre-approval is one of your only weapons in the battle of homebuying. Even if you have immaculate credit and have experience buying a house, nothing impacts your offer better than having a pre-approval from a trusted lender. 

Turn to Bison State Bank for a Competitive Mortgage Pre-approval

We understand how important it is to have a competitive advantage in the housing market. That’s why we do our due diligence to ensure your mortgage pre-qualification is a strong tool in your housing search. 

Our experienced mortgage professionals are passionate about helping our clients take their first steps toward a better future, and a pre-approval is one of those steps. 

The loan officers at Bison State Bank won’t pressure you into a loan that’s not suitable for your needs. We are professionals in this industry with the know-how to fit each client with a tailored loan solution. We strive for customer satisfaction, and we’re not satisfied until you are. 

Contact us today to see how our approach of honesty, integrity, and experience helps you find the right home loan solutions. 

A special thank you to our Loan Officer, Basil Benyo, for providing his expertise on this topic.

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