Mortgage Preapproval: What It Is and How to Get One

What Is Mortgage Preapproval?

Mortgage preapproval is a process where a lender verifies your financial qualifications, including income, assets, debts, and credit history, to determine how much you are eligible to borrow. It is a more thorough step than prequalification and gives you a clearer picture of your homebuying budget.

Keep in mind that preapproval is not a guarantee of a loan; final approval is subject to underwriting and a property appraisal.

Sources: Union Home Mortgage

Preapproval vs. Prequalification: Key Differences

A mortgage preapproval is different from a prequalification, which provides only a rough estimate based on self-reported information and does not involve thorough verification of financial documents. Prequalification is often a quick, informal assessment, while preapproval involves a detailed review of your finances.

• Prequalification: Often involves a soft credit inquiry that may not affect your credit score, no document verification, and provides a rough estimate of what you can afford.
• Preapproval: Usually involves a hard credit inquiry, verification of income, assets, and debt, and results in a formal letter from the lender.

Sources: FDIC, Union Home Mortgage

Why Preapproval Matters

A preapproval letter strengthens a home offer and signals to sellers that you are a serious and qualified buyer. Sellers are more likely to consider your offer if they know a lender has already reviewed your financial situation. Preapproval also helps you understand how much home you can afford, avoiding wasted time looking at properties outside your budget.

Sources: Union Home Mortgage, PNC

Documents Needed for Preapproval

To apply for preapproval, you will typically need to provide several documents to verify your financial situation. Lenders require these to confirm your income, assets, and debts.

• Government-issued ID (such as a driver's license or passport)
• Recent pay stubs (usually covering the last 30 days)
• Two years of tax returns
• Bank statements for the last 2–3 months
• Information about current debts (credit card statements, loan statements, etc.)

Sources: FDIC, Bank of America

Steps to Get Preapproved with Union Home Mortgage

Union Home Mortgage offers a straightforward preapproval process. To get started, you can use UHM's online prequalification application or contact a UHM loan officer directly. While the exact steps may vary, the general sequence is as follows. Some lenders may complete preapproval in as little as 1–3 business days, but timelines can vary.

1. Gather your financial documents, including pay stubs, tax returns, bank statements, and debt information.
2. Start UHM's online prequalification application or contact a UHM loan officer to begin the process.
3. Authorize a credit check. This will typically involve a hard inquiry, which may temporarily lower your credit score.
4. Provide any additional documentation requested by the lender to verify your financial information.
5. Receive your preapproval letter if you meet the lender's requirements.

Sources: Union Home Mortgage