A lender's pre-approval
is a limited-time commitment to fund your mortgage loan. A pre-approval may include an interest rate lock
. To obtain a pre-approval, a lender evaluates your credit history
, and calculates your housing
and debt ratios
. You should expect to verify your income, length of employment and source of down payment
A pre-approval legitimizes you as a serious buyer. It also gives you additional negotiating leverage to negotiate a sale price, especially if the seller cannot find other pre-approved buyers.
When seeking a pre-approval, it's important not to misrepresent the facts on your application. If a lender learns later that you've misrepresented or
omitted information on your application, your pre-approval may be rescinded.
As part of the pre-approval process, a lender obtains your credit report
. You should be familiar with the contents of your credit reports from all three major credit bureaus:
If a lender denies your pre-approval, you should investigate immediately. Without a pre-approval, your chances of obtaining a mortgage loan are jeopardized. If a lender bases the decision, in part, on information in your credit report, you have the right to receive a free copy of the report.