The ALCOVA Process: Your Guide to Mortgage Pre-Approval

1. Understand Mortgage Pre-Approval

A mortgage pre-approval is a conditional commitment from a lender that estimates how much they’re willing to lend you, based on a careful review of your financial profile—your income, credit, assets, and debts. Unlike pre-qualification, which is a simple estimate without verification, pre-approval requires a hard credit pull and documented proof of your finances.

Why it matters:

Helps you target homes within your budget.
Boosts your credibility with sellers—most prefer offers with pre-approval letters.

2. Prepare Your Documentation

Lenders will ask for a suite of documents to assess your eligibility. Common requirements include:

Income verification: Paystubs, W-2s, and tax returns (especially if self-employed).
Assets: Bank statements, savings, or investment accounts to confirm down payment and closing costs.
Credit and identity: Driver’s license, Social Security number, and authorization for a credit check.
DTI evaluation: Lenders will calculate your debt-to-income (DTI) ratio to ensure affordability.
Employment verification: Lenders may confirm your employment directly with your employer.

3. Shop and Compare Lenders

Start by researching different lenders—credit unions, banks, and mortgage companies—and compare:

Rates and fees
Loan options (e.g., FHA, VA, conventional)
Customer service reputation

Applying with multiple lenders within a 30–45-day window helps limit the impact of hard credit pulls on your score. This comparison can uncover better terms, especially if you’re eligible for specialized loan programs.

4. Check Your Credit and DTI Ahead of Time

Pull your credit report in advance to catch errors before lenders do. Correcting inaccuracies and lowering high credit card balances can improve your score.
A lower DTI ratio (ideally under 43–50%) will also strengthen your application and improve your loan options.

5. Submit Your Pre-Approval Application

Once your documents are ready and you’ve selected a lender:

Complete the application online or in person.
Allow the lender to perform a hard credit check.
Submit your financial information for review.

Within a few business days, many lenders will send you a Loan Estimate, outlining your potential interest rate, loan amount, estimated monthly payments, and closing costs.

6. Receive the Pre-Approval Letter

Once approved, you’ll receive:

A pre-approval letter stating how much you qualify for.
Details like loan type, potential interest rates, and expiration date.

Most letters are valid for 60 to 90 days, though this varies by lender. If needed, you can request an updated letter by submitting refreshed documentation.

7. Avoid Common Pitfalls

Here are key mistakes to steer clear of:

Waiting to save a 20% down payment—competitive rates may be available with lower down payments.
Not shopping multiple lenders—one offer isn’t always the best.
Confusing pre-qualification with pre-approval—pre-approval carries far more weight with sellers.
Making major financial changes (like opening new credit cards or switching jobs) during the process, which can jeopardize approval.

8. House-Hunt with Confidence

With your pre-approval in hand, you can confidently focus on homes that fit your budget. It also gives you leverage when making offers and can speed up closing once your offer is accepted.

ALCOVA’s Pre-Approval Summary Table

Step	What You Do	Why It Matters
1. Prep Financials	Collect income, asset, credit documents	Ensures smooth application
2. Shop Lenders	Compare offers and terms	Finds best deal and reduces credit impact
3. Apply for Pre-Approval	Submit application, allow credit check	Provides realistic loan estimate
4. Receive Approval Letter	Check approved amount and terms	Strengthens buyer position
5. Move Forward with Home Search	Use letter in offers	Saves time and enhances seller confidence

Why ALCOVA Is Your Trusted Partner

At ALCOVA, we streamline your pre-approval process so you can focus on finding your dream home:

Fast and accessible applications, both online and in person.
Clear guidance on documentation, so you’re prepared.
Multiple loan options, including specialized programs.
Support through closing, ensuring a seamless path from pre-approval to homeownership.

Final Thoughts

A mortgage pre-approval sets the foundation for a confident, efficient homebuying journey. By organizing your documents, comparing lenders, and navigating the process step by step, you empower yourself to move quickly—and convincingly—in the housing market.

Ready to start? Let ALCOVA guide you every step of the way, from documentation to pre-approval to the home of your dreams.