When should I get preapproval and will credit pulls hurt my credit?
Written by Graham Team · Graham Team Real Estate Advisors — Henderson & Las Vegas, NV · Contact
Learn when to get a Las Vegas mortgage preapproval and how credit pulls affect your score. Prepare for your Henderson home search with a strong offer.
Dated: July 8 2021
The Graham Team recommends getting a preapproval completed prior to looking for that perfect home.
Getting preapproved gives you an idea of how much home you can afford. You will also have an idea as to how much money the lender will loan you so that you can be prepared for what is needed for a down payment and closing costs. Many of our clients are surprised on what they can qualify for. Some even qualify for more than they thought and others less than they anticipated. Being prepared keeps you in strong position when its time to make an offer.
Also, in Nevada, when an offer is made on a home, most seller require a preapproval to accompany the offer.
The Loan Approval Process is done in two-steps, the PRE-APPROVAL and then FINAL LOAN APPROVAL.
The Pre-Approval
It is a good idea to get the preapproval step completed early on so that if the lender needs additional documentation or additional information you have time to get that to them. The preapproval can generally be issued within 1-3 days after the lender has received a completed loan application. There are some situations that may require more time to get a preapproval completed such as when you are Self Employed.
The Final Loan Approval
The final loan approval process occurs during the time frame you are under contract for your home purchase. The sales contract, an appraisal of the home, verification of employment and last-minute credit updates are some of the things that occur during this time frame. Typically, this process takes 20 to 25 days, depending on how fast you are on providing the lender required documentation.
Will credit pulls hurt my score?
There are two different types of credit pulls: a soft credit pull and a hard credit pull.
Soft inquiries are used for an initial look at your credit history. These do not negatively affect your credit. On the other hand, hard inquiries can negatively affect your credit. While a hard inquiry will stay on your credit report for two years, it will usually only impact your credit for a few months. The impact can vary but typically will affect your credit about 5points for every hard pull.
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Frequently asked questions
When should I get a mortgage preapproval?▾
You should get a mortgage preapproval before you start shopping for homes. Getting preapproved early ensures you know exactly how much home you can afford, helps you prepare for down payments and closing costs, and prevents sudden surprises. Additionally, most sellers require a preapproval letter to accompany any offer you submit.
Will credit pulls for mortgage preapproval hurt my credit score?▾
Yes, but the impact is minimal. While soft credit pulls do not affect your score, a hard credit pull for a mortgage preapproval will temporarily lower your score by about five points. This hard inquiry stays on your credit report for two years but typically only impacts your credit score for a few months.
How long does the preapproval process take?▾
A mortgage preapproval typically takes one to three days after the lender receives your completed loan application. However, if you are self-employed or have a complex financial situation, the lender may require additional documentation, which can extend the timeline. It is best to start this process early.
What is the difference between a preapproval and final loan approval?▾
A preapproval is an initial assessment of your creditworthiness done before you find a home, taking about one to three days. Final loan approval occurs after you are under contract on a specific property. This second step requires appraisal, employment verification, and final underwriting, usually taking 20 to 25 days.
Why do sellers require a preapproval letter with an offer?▾
Sellers require a preapproval letter because it proves you are a qualified buyer with the financial backing to purchase their home. In competitive markets like Nevada, submitting an offer without a preapproval letter makes your offer weaker, as sellers want reassurance that your mortgage financing will not fall through.
What is the difference between a soft credit pull and a hard credit pull?▾
A soft credit pull is a preliminary review of your credit history that does not impact your credit score. A hard credit pull occurs when a lender officially reviews your credit report for lending decisions. Hard credit pulls can lower your credit score by about five points per inquiry.