When you’re ready to buy a home, getting pre-approved for a mortgage loan is one of the most important steps. Pre-approval from a lender like Wells Fargo demonstrates to home sellers that you are a serious buyer who has been thoroughly vetted and can obtain financing. Keep reading to learn everything you need to know about securing pre-approval for a Wells Fargo home loan.
What is Pre-Approval for a Mortgage?
Pre-approval is when a mortgage lender like Wells Fargo performs a comprehensive review of your finances and officially approves you for a home loan up to a specific dollar amount.
With pre-approval, the lender verifies your income, assets, debts, credit score and other financial information. This gives them confidence you can qualify for the loan amount they specify.
Pre-approval provides you with an accurate, conditional loan commitment from the lender. This commitment has an expiration date and remains valid as long as your finances stay the same until you close on the home.
Benefits of Getting Pre-Approved
There are many advantages to getting pre-approved before you begin house hunting
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Know your price range – Pre-approval lets you know the maximum home price and loan amount you can comfortably afford. This helps you set a realistic budget for your home search.
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Make stronger offers – Sellers will take your offer more seriously when they see you have a valid loan pre-approval letter from a reputable lender like Wells Fargo.
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Speed up the process – Much of the detailed financial documentation and underwriting required for a mortgage has already been taken care of through pre-approval. This makes the loan process quicker and smoother later on.
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Lock in rates – Many lenders let you lock in an interest rate with pre-approval, protecting you if rates rise later.
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Negotiate from a position of strength – With financing already secured, you don’t have to compromise on price or financing terms later to appease the seller.
Pre-Approval vs. Prequalification
Pre-approval and prequalification sound similar, but they are very different when it comes to buying a home.
Prequalification is simply an estimate from a lender of what you may potentially qualify for. It requires only limited information and no proof or verification.
Pre-approval is an official approval of your loan application from the lender. They have reviewed and verified all your financial details and credit report.
Always get pre-approved by a lender rather than just prequalified if you want accurate mortgage information and a strong position in your home purchase.
How to Get Pre-Approved by Wells Fargo
Getting pre-approved for a home loan from Wells Fargo involves:
1. Submit your application online – Provide financial details such as income, debts, assets, the property address and estimated home value. Wells Fargo has an online application you can easily complete and submit.
2. Send in documents – Your loan officer will provide a list of financial documents required, including pay stubs, tax returns, bank statements and your identification. Send copies by email, fax or mail.
3. Get your credit pulled – Wells Fargo will perform a hard credit check to review your full credit report from the bureaus. This allows them to verify your credit score and history.
4. Follow up on next steps – The loan officer will let you know if any other information is needed to underwrite and approve your loan request. Approval may take anywhere from 2 days to 2 weeks.
5. Get your pre-approval letter – Once approved, Wells Fargo provides a formal pre-approval letter detailing your loan amount, interest rate and program terms.
Your pre-approval letter is typically valid for 60 to 90 days. Make sure you don’t make any major financial moves before closing on your home.
Documents Needed for Pre-Approval
Every lender requires documents to verify your financial situation. Wells Fargo will request items such as:
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Identification like your driver’s license, passport or social security card
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Pay stubs covering the last 30 days
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W-2 tax statements for the last 2 years
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Federal tax returns for the last 2 years
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Documentation of any supplemental income
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2 to 4 months of bank statements
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Records of any stocks, bonds, mutual funds
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Information on 401k, IRA, or retirement accounts
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Records of any debts, loans, or credit cards
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Your divorce decree and settlement (if applicable)
Providing recent, accurate documentation helps expedite the pre-approval process. Make sure to check with your specific loan officer on any other documents they may need.
Factors That Determine Your Pre-Approval Amount
Wells Fargo considers several criteria when determining the maximum home loan amount they can pre-approve you for. These include:
Debt-to-income ratio – Your total monthly debt payments versus your gross monthly income. This ratio usually can’t exceed 45%.
Credit score – Most lenders require a minimum score in the high 600s to low 700s for approval. Higher scores get better rates.
Down payment amount – How much you can put as a down payment lowers the loan amount and required financing.
Income stability – Steady income from employment or other verified sources.
Assets and reserves – Funds remaining after your down payment, like in your checking or savings account.
Property type – The loan amount may vary based on whether you are buying a single-family home, condo, multi-family property, etc.
Location and price – How much home you can afford varies by real estate markets across the country. More expensive areas require higher income and down payments for the same priced home.
Work on optimizing these areas before you apply for pre-approval. That will help maximize your chances of qualifying for the loan amount you need.
How Long is a Wells Fargo Pre-Approval Valid?
Once issued, a Wells Fargo pre-approval letter is typically valid for 60 to 90 days. This may be extended in some cases.
To ensure your pre-approval remains active, avoid any major changes to your finances. Your pre-approval could become invalid if you:
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Change employers or leave your job
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Co-sign another loan
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Make a large purchase like a car or boat
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Open new credit cards or apply for other financing
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Withdraw or borrow against your downpayment funds
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Your bank statements or pay stubs show irregularities
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Your credit score drops significantly
Alert your loan officer regarding anything that occurs financially before closing on your home. They may request updated documentation to keep your pre-approval valid.
Next Steps After You Are Pre-Approved
Being pre-approved is just one step on the path to homeownership. You’ll also need to:
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Find a real estate agent – An experienced agent will help you identify homes in your price range and make competitive offers based on your pre-approval letter.
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Make an offer – When you find the perfect home, your agent will submit an offer and include your pre-approval letter from Wells Fargo.
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Complete loan underwriting – After your offer is accepted, Wells Fargo will officially underwrite your full mortgage application and issue a loan commitment letter.
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Lock your interest rate – Work with your loan officer to lock in an interest rate so it doesn’t rise before closing.
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Go through escrow – The escrow company handles all money transfers required at closing between you, the seller, Wells Fargo, and other parties.
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Close on your home – At closing, you sign all final paperwork and receive the keys! The home is yours.
With a pre-approval letter from Wells Fargo in hand, you can embark on your home buying journey with confidence.
Frequency of Entities:
Pre-approval – 21
Mortgage lender – 3
Wells Fargo – 17
Home loan – 7
Loan amount – 10
Lender – 5
Mortgage loan – 3
Loan commitment – 3
Interest rate – 4
Home sellers – 1
Loan pre-approval letter – 3
Loan officer – 5
Credit report – 2
Financial information – 2
Loan process – 2
Prequalification – 4
Prequalified – 1
Pre-approved – 4
Online application – 1
Pay stubs – 2
Tax returns – 2
Bank statements – 1
Credit check – 1
Credit history – 1
Credit score – 5
Debt-to-income ratio – 2
Down payment – 4
Income stability – 1
Assets – 2
Reserves – 1
Real estate markets – 1
Valid – 4
Loan commitment letter – 1
Escrow company – 1
How to prequalify for a home loan online
Getting prequalified online is quick and simple. Just provide the following information:
- The city and state where you are looking to buy
- For a home purchase, the estimated purchase price and down payment
- For a refinance, the estimated home value and how much you currently owe
- Your annual income, date of birth, current address, and contact information
We’ll use that information, along with your credit rating and monthly debt, to calculate the loan amount, interest rate, and monthly payment you could qualify for—all in just a few minutes without affecting your credit score.
No. When we check your credit for a mortgage prequalification, its considered a “soft” credit inquiry, which does not affect your credit score.
If you decide to move forward after prequalifying, well ask your permission before doing a “hard” credit inquiry later in the process.
No documents or fees are required for a mortgage prequalification. Thats one reason why a prequalification is just an estimate: its based on financial information that hasnt been documented and verified.
Later on, if you decide to complete a full mortgage application, your home mortgage consultant and loan processor will let you know exactly what documents to provide.
Prequalification and preapproval actually have more similarities than differences:
- Neither comes with any fees or obligations.
- Neither one is a commitment to lend.
- Both provide an estimate of how much you could borrow to buy a home.
- Both base that estimate on factors like your debt-to-income ratio, how much you have for a down payment, and your credit history.
The key difference is that a preapproval is a more accurate and reliable estimate based on a more complete view of your credit. Thats because when you prequalify, we perform a “soft” credit inquiry, which gives us information about your credit history and monthly debts, but this doesnt provide as much detail as a “hard” credit inquiry, which is required for a preapproval.
Your preapproval also comes with a PriorityBuyerSM Preapproval Letter that you and your agent can give to sellers when you make an offer, so they know youre a serious buyer.
If youre not sure which option is right for you, start by getting prequalified online. It only takes a few minutes, and afterward you can easily take the next step and let us know youd like to get preapproved.
A prequalification doesnt come with an expiration date. On the other hand, the more time that passes after getting prequalified, the more likely it is that something could change that affects your estimated loan amount.
When you get prequalified, we estimate how much you could borrow based on your income, debts, credit, and down payment amount at that moment in time. If all those things stay the same, the amount you qualify for shouldnt change dramatically.
If things do change, dont worry — you can always come back and repeat the process to double check your results. Getting prequalified online with Wells Fargo is quick and simple, costs you nothing, and doesnt affect your credit score, no matter how many times you do it.
Three minutes. Six questions. Zero credit impact.
Get prequalified now to know your estimated mortgage rate and see how much you could borrow.
How to get pre-approved for a mortgage
FAQ
How hard is it to get a mortgage loan at Wells Fargo?
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