Pre-Approval Letters: Frequently Asked Questions

Interested in getting pre-approved to purchase a home but don’t know where to start? We put together a list of the most common questions we are asked about pre-approval letters. Check out our answers below and let us know if you have any questions!

• What is a pre-approval letter?
  • A pre-approval letter is a document provided by a mortgage lender that states you are qualified to purchase a specific property. Lenders issue pre-approvals to buyers to show their official willingness to lend them money for a home purchase.  Pre-approvals are issued after an application has been reviewed, documentation has been verified and confirmed, and credit has been pulled.

• Why do I need a pre-approval letter?
  • When you’re putting an offer in on a home, a pre-approval demonstrates to the sellers that you are financially able to purchase the home. In today’s market, it is rare that an offer is accepted without a pre-approval letter along with it. If you want to buy a home, you’ll likely need a pre-approval letter!

• What is required to get pre-approved?
  • Along with filling out an online application, the following documentation is required:
  • Proof of identify: a government-issued ID (driver’s license or passport, for example)
  • Income verification: Pay stubs (covering the most recent 30 days) and W2s (from the past year or 2, depending on the case)
  • Down payment verification: Bank/asset statements (covering the past 2 months)
  • If you’re self-employed, additional documentation is required, such as tax returns, profit and loss statements, balance sheets, and extra bank statements
  • Note: Our team at Alerus takes pride in the due diligence of our review of your application to ensure that you will buy a home with 100% confidence in your approval.

• How long does it take to get pre-approved?
  • It can take us as quick as a few hours to get you pre-approved given the application is complete and we’ve received all required documentation. Once you submit your application and documents, we will review everything as soon as we can, request any follow-up documents as needed, and pull your credit (given you authorize us to). With that being said, some applications may take longer to review than others. For example, we may need to reach out to your employer to verify your employment, which may take a few days depending on the promptness of your employer.
  • Note: Our team at Alerus will work nights and weekend to make sure we do everything we can to get you approved in the case of an emergency.

• How long does a pre-approval last for?
  • Pre-approval expiration dates vary by lender, ranging from 1 to 4 months. Alerus’ pre-approvals expire after 4 months from the date your credit is pulled!

• When should I get pre-approved?
  • Get pre-approved before you begin your home search and show up to tours with a pre-approval in hand! This ensures you don’t encounter any hiccups or mad dashes to suddenly get pre-approved when you find the perfect home.

• When my pre-approval expires, do I have to re-apply?
  • No! In fact, it’s quick and easy to update an expired pre-approval. All we need is updated bank statements, pay stubs, and to pull new credit, which is free to you and doesn’t hurt your credit scores.

• What’s the difference between a pre-approval and a pre-qualification?
  • A pre-qualification is a rough estimate of the purchase price you would qualify for based on your answers to a few questions. This does not involve any documentation or applications. Pre-qualifications will not help you get an offer accepted by a seller like a pre-approval does. However, getting pre-qualified is a good place to start the home buying process if you’re curious as to how much you will afford but are not ready to apply for a pre-approval.

• What if I find a house in a different price range than my approval?
  • As part of your approval, your maximum purchase price will be established. You are free to offer any amount that does not exceed that number. We will be available at the time of your offer to ensure the home fits into your qualification.

• Do pre-approvals differ based on the company or lender?
  • Yes! In fact, Alerus offers a special $20,000 Guarantee to go along with our pre-approvals. This means that if we aren’t able to close your loan, we pay the seller $20,000. This gives the seller extra confidence that there will be no hiccups in the financing of your purchase. We are proud to say that in 27 years of business, Alerus has not missed a single closing!