The short answer: Very small.
The longer answer: Obtaining mortgage pre-approval in Minnesota is almost identical to gaining prequalification. The distinction between mortgage pre-approval and pre-qualification in Minnesota is almost entirely at the lender’s discretion. Depending on the lender, a mortgage pre-qualification or pre-approval in Minnesota may be the same thing, or two separate processes. When regarded as two different steps, a pre-qualification can be viewed as the first step in towards a loan, and involves a lender evaluating your credit and going over your plans, while a pre-approval will also include the lender requiring tax return/pay stub verification.Overall, for you, the choice will likely come down to market credibility. We recommend discussing the pros and cons of either with your real estate agent!
What Does Mortgage Pre-Approval or Pre-Qualification in Minnesota Entail?
The primary function of pre-approval or pre-qualification is to establish yourself as a serious buyer. When you make an offer and present proof that you are able to, and intend to, come up with the funds to buy a home, this can give the sellers valuable piece of mind when evaluating you as a potential buyer.
In order to obtain mortgage pre-approval (we will call this process ‘pre-approval’ for the remainder of the article to avoid confusion), you need to meet with a lender, who will require info such as your credit score, pay stub verification, etc (we will go over this in detail later in the article). To find a lender, we recommend reaching out to your agent, who most likely has positive relationships with lenders and can point you to the one who will be the best fit. We also recommend doing your own research, and seeing if the recommended lender feels like a good option for you.
Why Should I Make Obtaining Mortgage Pre-Approval in Minnesota a Priority?
When it comes to offers to purchase, especially in a competitive market, a pre-approval letter can set you apart from other buyers. Not only will it demonstrate to sellers that you are able to finance the purchase, but you also make clear that you are a committed contender in the buying market. A preapproval letter, and the entire pre-approval process, can also give you a very useful idea of your price range, and help narrow your overall home search. We also recommend:
- Seeking multiple pre-approvals if needed- this can be a strong way to make sure that you’re receiving a loan with the best rates and terms for you. It’s also more possible than many think- pulling credit multiple times won’t damage your credit score as long as they’re mortgage inquiries being pulled within a 2-week period.
- Starting with a pre-approval, even before you’ve looked at a single home, is the safest way to make sure you can pounce on the perfect home as quickly as possible. This helps you avoid having to wait for a lender to meet with you and draft a preapproval letter after the fact.
- Timing matters, so be aware of your general timeline. Pre-approval letters are almost always considered valid for a set period of time (expect between 60-90 days). Obtaining your letter as close to the beginning of your search as possible gives you a competitive AND efficient edge.
How Do I Get Started, and What Should I Bring to My Consultation?
Once you’ve scheduled a meeting with a lender, you’ll need to provide your:
- Social Security Number
- Permission to pull credit report
- Savings and Checking bank statements spanning the past 3 months
- Pay stubs spanning the last 3 months
- W-2’s from the last 2 years
- Asset statements from stocks, bonds, retirement accounting, etc. from the past 2 months
- Information regarding your current mortgage, or, if you are renting, contact info for your landlord
- Marriage, divorce, and other life-event documentation if applicable
For more information about whether or not obtaining a mortgage pre-approval in Minnesota is right for you, as well as any guidance on seeking one of your own, please contact our experts at The Antonov Group today!