Credit Score Considerations
When you apply for mortgage preapproval, it usually triggers a hard inquiry on your credit report, which may lower your credit score by 3 to 5 points temporarily. The good news is that multiple inquiries for the same purpose—such as mortgage shopping—within a 30-day window are treated as a single inquiry, helping to minimize the impact on your score.
Why Preapproval Strengthens Your Offer
Mortgage preapproval demonstrates to sellers that you’re a serious buyer with verified financial credentials. In competitive markets or bidding wars, this can make your offer stand out. Sellers often favor preapproved buyers because it reduces the risk of the deal falling through due to financing issues.
Timing is Key
To maximize the benefits of preapproval, timing matters. Preapproval letters typically remain valid for 60 to 90 days, so it’s best to apply when you’re ready to actively search for homes. If you’re still in the early stages, consider starting with prequalification—it doesn’t impact your credit score and can give you a clearer picture of your budget before committing to a formal preapproval process.
Balancing Costs and Benefits
While the temporary credit score dip from preapproval is a consideration, the benefits far outweigh the cost. A preapproval can lead to savings through better interest rates and gives you a stronger position to secure the home you want.
Mortgage preapproval is more than just a step in the home-buying process; it’s a strategic tool to help you stand out in a competitive market.
If you have financing questions or need a referral, please reach out. It's my pleasure to assist you in your real estate journey any way I can!
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