A married couple in California getting a mortgage pre-approval.

How To Get A Mortgage Pre-Approval

Every month, Californians across the state begin their homebuying search. Some start online, and others reach out to a local realtor. However, the very first step should be a mortgage pre-approval.

Below, I’ll cover what a mortgage pre-approval is, the benefits and requirements, and how to get onel. I’ll also provide industry-pro tips that will save you time and money and help you avoid a surprise at closing.

What is a mortgage pre-approval?

A mortgage pre-approval is when a mortgage company reviews your loan application, credit history, income, and asset documentation to determine if you are eligible to buy a home under their specific underwriting guidelines. If you are, the mortgage pre-approval will clearly state the pre-approval terms (i.e., your pre-approved purchase price and the amount required for a down payment).

Why should I get a mortgage pre-approval?

In California, getting a mortgage pre-approval is generally required of sellers. The market in California is very competitive. Sellers only want to consider offers from buyers who have gone through the pre-approval process.

Also, getting pre-approved for a mortgage will save you time and money.

Here are the benefits of getting a mortgage pre-approval

The benefits of getting a mortgage pre-approval include;

  • You’ll know how much you can afford before you start your homebuying search.
  • Homebuyers who obtain a mortgage pre-approval know their anticipated monthly mortgage payment before entering into a contract to buy a home.
  • Your offer will be taken more seriously by the seller.
  • Once your offer is accepted, you’ll have a faster underwriting process, saving you time and money.

The benefits of getting a mortgage pre-approval are clear. Speaking with a loan officer and getting pre-approved before you make an offer puts you in a better place in the homebuying process.

Here are the requirements for getting a mortgage pre-approval

Below is a list of requirements for getting a mortgage pre-approval.

  • Personal information
  • Employment verification (not required if you are retired)
  • Verifiable proof of income
  • If retired, proof your retirement income will continue
  • Liquid assets (cash) for your down payment and closing costs
  • Completing a loan application

You’ll need your personal information, such as your name, where you live, your social security number, and date of birth. If you are a W-2 employee, you’ll need your employment and income details. If you are self-employed, you’ll need the details about your business, and those who are retired must disclose where their retirement income comes from.

Liquid asset information for your down payment and closing costs will also be needed, and you will also need to complete a loan application.

Usually, a mortgage pre-approval can be completed by a knowledgeable loan officer within 24-48 hours.

Do You have a question or need a quote?

Contact Kevin

Low rates, fast closings, and exceptional service.

My step-by-step process of getting a mortgage pre-approval

Below is my five-step process for getting a mortgage pre-approval.

Step One – Gather Your Documents

The first step to getting a mortgage pre-approval is to gather your income, assets, and other required documentation. I will break down the first step into three groups: W-2 employees, self-employed, and retired or on disability.

Each group will provide a different set of documents to the loan officer. Find your group below, then gather the documents you’ll need.

W-2 Employee

  • Personal information – make a copy of your driver’s license and your social security card (if available).
  • Your most recent two years of W-2 forms.
  • Your most recent two paystubs.
  • If you have a side business for which you file an IRS return, then obtain the two most recent returns.
  • Your down payment will come from the two most recent asset statements.
  • If different, the two most recent asset statements from which you will pay the closing costs from.
  • If you own additional property, you’ll need a copy of the mortgage statement, homeowners insurance declarations page, and, if applicable, an HOA statement for each property owned.

Self-Employed

  • Personal information – make a copy of your driver’s license and your social security card (if available).
  • Please provide the two most recent years of tax returns, including all pages and all schedules (federal), including your schedule K-1 if you received one.
  • If you receive a W-2 from a part-time job, the most recent two years of your W-2 and the most recent two paystubs you’ve received.
  • The two most recent asset statements from which your down payment will come from.
  • If different, the two most recent asset statements from which you will pay the closing costs from.
  • If you own additional property, you’ll need a copy of the mortgage statement, homeowners insurance declarations page, and, if applicable, an HOA statement for each property owned.

Retired or on Disability

  • Personal information – make a copy of your driver’s license and your social security card (if available).
  • Please provide the two most recent years of tax returns, including all pages and all schedules (federal), including your schedule K-1 if you received one.
  • Your benefit statement (aka awards letter) for the retirement income (or disability income) you are receiving.
  • The two most recent asset statements from which your down payment will come from.
  • If different, the two most recent asset statements from which you will pay the closing costs from.
  • If you own additional property, you’ll need a copy of the mortgage statement, homeowners insurance declarations page, and, if applicable, an HOA statement for each property owned.

*asset statements could be your checking account, savings account, or any other liquid asset account from which you can draw funds from

Having the above documentation ready before you pick your mortgage company will help speed up the pre-approval process.

Step Two – Get Your Quotes

The second step to getting a mortgage pre-approval is to obtain three quotes from highly-rated mortgage companies. Your quotes should only come from the best mortgage companies you can find. Stay away from poorly rated companies with questionable reputations. There are four types of mortgage companies;

  • Mortgage brokers
  • Banks
  • Credit Unions
  • Mortgage lenders

I suggest working with at least one top-rated mortgage broker since mortgage brokers can work with multiple funding sources and typically have the best rates. Reach out to friends and family, and use reputable online services like the Better Business Bureau and Zillow to find the three mortgage companies you want to get your quotes from.

This is so important to the mortgage pre-approval process. When you work with the best mortgage companies, you’re more likely to have a successful transaction and help you avoid surprises at closing.

Step Three – Pick Your Mortgage Company

Step three to getting a mortgage pre-approval is to pick your mortgage company. Once you’ve chosen the mortgage company you want to work with, do the following;

  • Email or call the loan officers and let them know you would like to get pre-approved for a mortgage.
  • Advise them that you have your documentation ready to go.
  • Be clear about the purchase price range you want pre-approved for.
  • Tell them the amount of money you have for a down payment (remember, down payment funds do not cover closing costs).

Picking the right mortgage company is perhaps the most important step in the process of getting pre-approved.

Step Four – Complete The Loan Application

Step four to getting a mortgage-pre-approval is to complete the loan application (which includes turning in your documentation). Typically, you can complete an online application, or you can complete the application over the phone or in person with the loan officer.

Getting pre-approved should only take the loan officer 24 to 48 hours from when all your documentation is in and your application is complete. It’s important to make sure you complete the entire application. Any missing information might delay the pre-approval process.

Step Five – Get Your Pre-Approval Letter

Once your loan officer is done reviewing your file, they’ll submit it to an Automated Underwriting System (AUS) to obtain the initial pre-approval. If the loan officer receives an “Approve/Eligible” notice from AUS, you’re officially “pre-approved.”

Your loan officer will follow up to let you know the good news, advise you of the terms you were pre-approved for, and issue a pre-approval letter.

Time To Make An Offer!

Now, you’re ready to make an offer, and with that offer, you can include your pre-approval letter issued by the loan officer. A mortgage pre-approval letter makes your offer much stronger than if you didn’t get pre-approved.

Industry-pro tips on the mortgage pre-approval process

Here are my tips on the mortgage pre-approval process.

  • Be realistic with what you can afford.
  • Always turn in your documentation in a timely manner.
  • Don’t take a chance on a mortgage company with a poor rating.
  • Avoid using a loan officer with little to no experience in getting people pre-approved.

House Rich, Cash Poor

Far too many people want to max out their pre-approved loan amount. I suggest you don’t. Have you ever heard of the term “house rich, cash poor”? This is when all your money is tied into your home, and you have little to no cash.

This happens when a homebuyer tries to max out their pre-approved loan amount. A homeowner in this situation is more likely to end up defaulting on their loan in the event of a jobless or other unexpected life event. To prevent this from happening to you, make sure you can afford the monthly payment, save for retirement, and afford your lifestyle.

Turn In Your Documentation

I know this seems like a no-brainer, but turning in your documentation in a timely manner is a key part of getting a mortgage pre-approval. There can be a big difference in the process even when a loan applicant decides to wait until the end of the day to turn in their documentation (even though they could have turned it in first thing in the morning.

Don’t Take Chances With Your Mortgage Pre-Approval

I have worked in the mortgage industry for 17+ years; I can safely say you are taking a significant risk if you decide to work with a mortgage company with a poor rating. I highly suggest you only work with a mortgage company with at least an A- rating with the Better Business Bureau and a 4.5-star rating (or higher) online with Zillow and other online review sites.

Poorly rated mortgage companies do a poor job, and getting a mortgage pre-approval will add a level of risk you don’t want to add to the mortgage process.

Avoid Loan Officers With Little To No Experience

A loan officer with little to no experience getting a mortgage pre-approval for their clients is a recipe for disaster. I suggest you only work with a loan officer who has at least five years of experience in getting clients a mortgage pre-approval.

This ensures accuracy and timeliness, and you’re less likely to have a surprise at closing.

Do You have a question or need a quote?

Contact Kevin

Low rates, fast closings, and exceptional service.

The bottom line on getting a mortgage pre-approval

There are numerous benefits of getting a mortgage pre-approval before you start your home search.

As you can see, the process of getting a mortgage pre-approval is straightforward when you are prepared before you reach out to a reputable mortgage company. Following my five-step process and using my industry-pro tips will help save you time and money. Sticking with the industry-pro tips will save you from being “house rich, cash poor” and help you avoid surprises at closing.

Loan Officer Kevin O'Connor

About The Author

Loan Officer Kevin O'Connor has over 17 years of experience as a Mortgage Loan Originator and is a trusted resource for mortgage education and information. He's the content creator of K.O. Home Loan Solutions and is licensed by the state of California and the Nationwide Mortgage Licensing System. He has a top rating with the Better Business Bureau, Google, Yelp, and Zillow. You can contact him at 1-800-550-5538. CA DRE #01499872 / NMLS #247447