Can I shop for a home without a mortgage pre-approval? - Owning (2024)

FAQs

Can I shop for a home without a mortgage pre-approval? - Owning? ›

Absolutely – a mortgage preapproval is helpful to have in your pocket when you're shopping around for a home, but not a prerequisite. That said, while you certainly can look at a house without preapproval, it's only recommended if you're in the earliest stages of planning to buy a home.

Certainly, you have the option to view houses without obtaining mortgage preapproval, but it's highly advisable to secure preapproval before diving deeper into the home buying process. Without preapproval, you may encounter challenges and uncertainties that could limit your ability to make competitive offers.

You do not have to have a pre-approval to make an offer on a home. You can put in your bid and a lender may consider it. However, if there are multiple buyers making offers on the home, the ones with a pre-approval tend to stand out more as it shows that they have been assessed already for approval of a loan.

It shows there will be little to no problems finalizing a mortgage. It tells sellers a bank has verified your information. Agents and sellers see that you're serious about buying a home. Sellers may accept offers under asking price when submitted with pre-qualification.

You can make an offer on a house that goes beyond what your preapproval letter will cover, but you will be expected to make up the difference out of pocket. If you can't increase the size of your down payment, then you can't make an offer that goes beyond your preapproval.

If you're denied preapproval with a lender, know that there are lenders out there with more lenient criteria; you'll just likely pay higher fees and interest rates. If time is on your side, it pays to be patient and spend the next few months shaping up your finances and credit score before trying again.

It's possible to get preapproved within an hour, but it can take up to 10 business days depending on how much documentation your lender requires and current processing speeds. Once you receive your preapproval letter, you can include it in your offers to home sellers to indicate you're a serious buyer.

Ultimately, prequalification is an optional step that can help you fine tune your budget, while preapproval is an essential part of your journey to getting mortgage financing.

However, even though prospective homebuyers get pre-approved for a mortgage before shopping for homes, there's no 100% guarantee they'll successfully get financing. Mortgages can get denied and real estate deals can fall apart — even after the buyer is pre-approved.

Once you have your preapproval letter, you may be wondering how long it lasts. Your income, credit history, interest rate — think about all the different ways your finances can change after you get your letter. For this reason, a mortgage preapproval typically lasts for 60 to 90 days.

Do you really need pre-approval? ›

It is not a requirement for borrowers applying for a home loan but there are definitely advantages to getting a home loan pre-approval. Pre-approval lets you work out how much you may be able to actually borrow in your particular financial situation.

Armed with a preapproval letter, you'll be able to make stronger offers on properties – and can potentially beat out other less well-prepared home buyers' offers as well. Bearing this in mind, you're strongly encouraged to get preapproved for a home loan before looking at homes or making an offer.

If the amount is too low, you might not be able to buy the home you want. To raise the loan preapproval amount, you might need to increase your income, lower your debt, improve your credit or do a mix of these factors.

The answer is yes. You can have multiple pre-approvals at the same time, and in fact, it's often a smart move done by savvy first-time home buyers and real estate investors. There is technically no limit on the number of pre-approvals you can get which makes shopping around with different lenders a no-brainer.

It is recommended that you get pre-approved for the absolute most you would ever consider to borrow. You can always borrow less but if you end up requiring more than the pre-approval, the whole assessment process needs to start again.

Getting a preapproval doesn't commit you to using that lender for your loan. Wait to decide on a lender until you've made an offer on a house and received official Loan Estimates from each of your potential lenders.

Keep your financial situation consistent, and understand what your pre-approval is based on. This isn't the time to buy a new car, switch careers, or finance a major purchase. If your finances change, a pre-approved mortgage could be denied when you're ready to close on a home.

A mortgage preapproval can have a hard inquiry on your credit score if you end up applying for the credit. Although a preapproval may affect your credit score, it plays an important step in the home buying process and is recommended to have.

Pre-approval doesn't require a hard credit inquiry. But if you choose to apply for the credit card offer, it'll trigger a hard inquiry. This occurs when a lender is considering extending a line of credit to you.