After I decided to make an offer, it was time to work on acquiring a mortgage pre-approval letter. This is probably a good thing to do even before you head out to the field looking at properties. It didn’t take me too long to do when I needed it, but I have a good credit score. Keep in mind it may take a bit more effort if you don’t.
Why You Need a Mortgage Pre-Approval Letter
The pre-approval accomplishes a couple of things for you. First, the buyer doesn’t know anything about you or your financial situation when you approach with an offer. A pre-approval letter lets them know you are serious and can (probably) get the loan you seek to close the deal.
Getting the pre-approval also helps you understand what banks are willing to lend you and at what rate. Online generic rate quotes are great, but once your credit score and financial situations are taken into account, things may look a bit different. Your borrowing capacity and rate are very important to understand as you work through analyzing potential investments.
How I Got a Mortgage Pre-Approval in Just a Few Minutes
I used Better.com to get a pre-approval. You don’t have to use them for your loan if you use them for pre-approval. I did end up using them for my loan as well, though I almost didn’t! I will tell you about that in a future post when I discuss how I got my loan.
Better is one of several platforms now offering quick online pre-approvals for your loan. I liked that it was a very quick process, and that I could customize the letter for my particular offer very easily.
My Experience With Better.com
They outline the process pretty well here, but I will walk you through the basics. They will ask you a few questions about your situation (where you’re looking to buy, whether you have a real estate agent) and then you get to the part where you put in your contact information. Yup, you will have to do this. They need to know who you are to determine your creditworthiness. In fact, they will even need your social security number. I found that they were not “spammy” at all though.
I once made the mistake of singing up at LendingTree to see some rate quotes. I instantly got about four text messages and 8 emails along with calls and follow up texts for weeks. Better is nothing like that.
Better.com will do a soft pull on your credit as well as ask you for identifying (social security) and financial information regarding bank accounts and investments, etc. The “soft pull” on your credit won’t impact your credit score. It happens fairly frequently when credit card companies check if they want to send you an offer in the mail, etc.
A “hard pull” does impact your credit, like when you actually apply for a loan or apply for a credit card, etc. This isn’t that, not yet at least.
The Letter from Better
After inputting the required information and a very short wait, I was pre-approved for a mortgage. The letter itself started out a little odd, since it seemed to calculate what the maximum possible loan I could get would be and put that on the letter. For example, if you’re buying a $200k home ($150k loan), you probably don’t need your letter to say you’re pre-approved for $500k.
The cool thing about the letter from Better is that it was easily customizable. I could adjust the letter and have it sent to me and my real estate agent in just a few clicks. I ended up setting it to the exact value of the offer I put in.
My Mortgage Pre-Approval Experience
Overall, I have to say it was quick and painless. I highly recommend checking out Better.com to help you with this initial phase of the loan process. As I mentioned, I ended up sticking with them for my mortgage, but that is not a requirement at all.
Quick, easy, painless, easily customizable, and… free? Sign me up! I may dip back into this resource as I search for my next investments!
