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Can I Look At A House Without Preapproval?

Cathie Ericson4-Minute Read
UPDATED: January 30, 2023

House hunting is an exciting proposition. You’re scrolling through dream properties, visiting open houses and picturing your new life. But if you think that heading online to check out available homes should be your first step in buying a house, think again. Before you call a real estate agent or start looking at property websites, you’re going to want to make another stop – and that’s to get preapproved for a mortgage. Here’s why that’s the very first step you should take when it’s time to think about buying a house.

What Is A Mortgage Preapproval Letter?

A preapproval letter is basically a “stamp of approval” that you are a buyer to take seriously. It’s a document from a lender that tells you exactly how much they are willing to offer you, getting you that much closer to having your financing lined up. A mortgage preapproval letter gives real estate agents and sellers confidence that you’re serious about making a purchase. Having your preapproval ready as you begin house hunting can help you become more successful in getting an offer accepted.

Should You Get Preapproved For A Mortgage Before Looking For A Home?

Having a preapproval letter before you begin looking for a house isn’t required, but it’s still a good idea to get your financing lined up as soon as possible. When you’re finally ready to get serious about a property, you can include that mortgage preapproval letter along with your offer, which makes the seller more likely to take you seriously. That’s because no seller wants to accept an offer and think a sale is at hand, only to find out that the buyer doesn’t actually qualify for the mortgage and can’t close the deal. In that case, the seller would be starting back at the beginning, looking for a new buyer. That’s why sellers often reject offers that don’t come with a home loan preapproval letter, and why this is a step you shouldn’t skip.

Can You Make An Offer Before Preapproval?

You don’t need to have a preapproval letter to make an offer on a home. However, especially in a seller’s market, you are likely to have a more difficult time getting your offer accepted without a preapproval. Sellers don’t want to waste their time on a buyer that isn’t guaranteed to close the sale. A preapproval can give a seller peace of mind that you’ve done the groundwork and are prepared to follow through with the purchase.

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How To Get Preapproved For A Home Loan

The mortgage preapproval process is thorough. Lenders need important personal and financial details to decide if they’re willing to assume the risk of giving you a mortgage. When you begin the preapproval process, you’ll share all your vital financial information with the potential lender. They’ll review things like your credit score, which will dictate whether they make the loan at all, and if they do, on what terms and at what interest rates. That’s why your credit report is such an important piece of your financial snapshot – it gives lenders a look at how well you’ve handled paying back credit in the past, which can lead them to assume that you’ll be equally responsible going forward.

After they review all your important documents, debts and credit history, they’ll give you the verdict on how much money they’re willing to lend you in the mortgage. To do this, they figure out your debt-to-income ratio (DTI), which tells them how much money you have to cover a monthly mortgage payment after all your fixed debts are paid. Different types of loans require different DTIs, but your mortgage lender will help you know what sorts of loan products you qualify for.

Of course, if something changes in your financial life, that could make a difference in whether you eventually get the mortgage, but generally speaking, a home loan preapproval is a solid estimate of the amount the mortgage lender is willing to offer you once you eventually find your ideal property.

If the paperwork seems daunting, just remember that you’ll need to do it eventually. By getting a home loan preapproval, you are just one step closer to making your dream of home ownership a reality.

Preapproval Vs. Prequalification

A mortgage prequalification is a less-official alternative to a preapproval. The process for a prequalification is much simpler than that for a preapproval. You’ll need to provide your name, income and employment status, and in return, you’ll get a budget range of how much a lender is likely to give you. With a mortgage prequalification, the lender isn’t actually verifying any of that financial information; they’re just taking your word for it. A prequalification can give you an idea of what your budget might look like so you can search for homes in that general range.

While a prequalification can be helpful to target your search, it doesn’t carry the same weight that a mortgage preapproval does. That’s because with a mortgage preapproval, the lender has done all their due diligence to ensure that the information you’re providing is accurate. They need that inside look into your finances to feel confident enough to move forward with the preapproval letter that shows the seller that your offer is solid.

How Do I Prequalify For a Home Loan?

It’s smart to shop your mortgage around to make sure you’re getting the best deal and service available. You can compare various lenders by the interest rate they offer, the terms, such as how many years it will take to pay off your mortgage, if there are any prepayment penalties and online customer reviews.

But remember, prequalifying for a loan is not as airtight as getting a mortgage preapproval. Even though the preapproval isn’t assurance of a mortgage, pending the final review just before you sign the mortgage papers, it holds far more weight than just prequalifying. Incidentally, it’s a step that your real estate agent or REALTOR® is likely to suggest as well since they prefer to work with a buyer who is serious.

The Bottom Line

A preapproval is an unofficial letter from a mortgage lender stating that they’re willing to give you a mortgage so that you can buy a home. The preapproval letter will also note how much you are preapproved to borrow so that you can make sure you’re looking at houses within your budget. While not required, it’s good to have your preapproval before you look at houses because it shows sellers that you are serious about buying a home.

If you’re just beginning the home buying process, get approved with Rocket Mortgage® as the first step on your home buying journey. 

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Cathie Ericson

Cathie Ericson writes about personal finance, real estate, small business, education, retail/ecommerce and other topics for a host of brands and websites. Her work has been featured on major media websites, including U.S. News & World Report, Forbes, Business Insider, The Oregonian, Industry Dive, Boston Globe, CNBC, MSN.com, Realtor.com and Yahoo Finance, among many others. Find her @CathieEricson.com.