- BUYING RESOURCES -
Mortgages & preapprovals
Mortgages can be confusing, and it may seem like there are endless options. Luckily, a lot of information and guidance on mortgages can be found online. It’s also useful to reach out to mortgage companies, which can provide advice and a preapproval.
- PREAPPROVAL -
A mortgage preapproval is crucial in determining what homes you can afford.
On YELLOW, a preapproval is required before you can visit or make an offer on a home. Sellers set their own preapproval thresholds.
For instance, if a seller lists their home for $200,000, they may specify that only buyers preapproved for $180,000 or more can visit. YELLOW will not disclose your preapproval amount or the minimum level set by the seller.
Having a preapproval benefits both buyers and sellers by preventing wasted time and resources on homes that buyers cannot afford. It also helps keep sellers safe since they are letting strangers into their homes.
- GETTING A PREAPPROVAL -
Contact lenders to get preapproved for a mortgage. The process is easy and free!
THE PREAPPROVAL
Getting a preapproval involves submitting basic information about your financial situation. Typically, within a day (or just a few minutes with some online lenders), you will receive a letter stating how much you are qualified for. The preapproval process is less involved than applying for an actual mortgage.
YELLOW SAYS...
To get a preapproval, we recommend buyers first reach out to their current bank or credit union, especially if it’s a larger bank. Having an existing relationship can be beneficial, and loan consultants can provide valuable advice on loan types.
However, when applying for your actual mortgage after your offer is accepted, it’s wise to shop around.
Some professionals recommend getting preapproval quotes from at least three different lenders, but your bank is usually adequate for preapproval.
LENDER TYPES
FINANCIAL INSTITUTION (BANK, CREDIT UNION, ETC.)
Most major and local banks offer mortgage products. Check with your current bank or credit union, as they may offer preferred rates or discounts to existing customers.
NON-BANK LENDER
Non-bank lenders like Quicken Loans and Loan Depot are increasingly popular. They might not provide as much customer support, which can be a disadvantage for less experienced buyers.
MORTGAGE BROKER
Mortgage brokers don’t work for any specific mortgage company. They search multiple lenders to find the best product for you. They are knowledgeable about various loan types and can provide substantial assistance. Mortgage brokers are usually local, independent companies and charge a fee often rolled into the mortgage.
ONLINE MORTGAGE BROKER
Online mortgage brokers function similarly to traditional brokers but operate online. They help you find the right lender. These are the companies like LendingTree.com and Bankrate.com.
ADDITIONAL RESOURCES
- PREAPPROVAL PROCESS -
The preapproval process is fairly straightforward. You will submit basic info about your financial situation and provide supporting documents. This process is less thorough than the actual mortgage application.
DOCUMENTS NEEDED FOR PREAPPROVAL
The lender will review your information and pull your credit before granting preapproval. This process usually takes one day (or even the same day) with large lenders, though it may take up to two or three days in some cases.
CAUTION!
A preapproval can be comforting but does not guarantee final mortgage approval.
Once your offer on a home is accepted, you will officially apply for the mortgage. A mortgage underwriter will need to verify your information, request additional documents, and ensure the property meets requirements. This process typically takes about 45 days or longer. It’s not uncommon for a preapproved mortgage to be ultimately rejected.
COMMON CAUSES OF MORTGAGE REJECTION
Here's an article where the author had their mortgage rejected after having a preapproval:
Home Buying Institute A mortgage rejection tale
ADDITIONAL RESOURCES
- MORTGAGE RESOURCES -
Given the vast amount of mortgage information available online, we provide links to useful resources.
MORTGAGE BASICS
MORTGAGE TYPES
FIRST TIME HOME BUYERS
YELLOW SAYS...
FINANCIAL PROGRAMS FOR FIRST TIME HOMEBUYERS
First-time homebuyers (those who haven’t owned a home in two years) have many helpful options available. Learn more from the links below.
FHA
VA
QUALIFYING FOR A MORTGAGE
What can you really afford?
The home search