Get The Facts: Will Pre-Approval Hurt My Credit?

We're spilling the beans on whether getting pre-approved for a mortgage lowers your credit score.
Dec 21, 2022

Getting mortgage pre-approval is one of the first steps toward buying your dream home. Pre-approval boosts the likelihood that the seller will accept your offer and gives you a detailed quote for your homebuying budget. 

But homebuyers often hesitate because they think that pre-approval hurts their credit score. Will it? 

The truth is that it will temporarily lower your score, as is true whenever a creditor pulls your credit report. But the benefits of getting pre-approved outshine the slight dip in your score. Read how.

Does a Pre-approval Impact My Credit Score?

A pre-approval usually requires a hard credit inquiry, although a soft inquiry is all that is needed for a pre-qualification. A hard inquiry can lower a borrower's FICO score by about five points or less. These lost points are typically recovered by keeping up with your on-time bill payment and maintaining your credit card debt low.

While every point matters in credit reporting, getting pre-approved is still one of the best actions you can take when looking to buy a home. 

Benefits of Getting Pre-approved

Don't let the small dent in your score prevent you from getting a pre-approval! The advantages of getting approved overshadow any negative impact on your credit score. Here's how that breaks down

Help You Determine Your Ideal Price Range

Knowing how much house you can afford helps you concentrate on properties that fit your budget, saving you time during house hunting. We'll also review your application and, based on your verified income and assets, make sure that your approval aligns with your budgeting.

More Bargaining Power

A pre-approval letter will increase your negotiating power since real estate agents and sellers know that you have talked to a lender and are a serious buyer.

Faster Closing Time

Getting pre-approved can help speed up the closing process because much of your financial information is already in the lender's system. This is one of the reasons why famous financial advice personalities highly recommend getting a mortgage pre-approval.

Should You Get a Mortgage Pre-approval?

Getting a mortgage pre-approval is one of the essential steps in the home-buying process. While it's not mandatory, it shows sellers how serious you are about buying the property. Need to learn more? Contact us today for more information.

Sphynx Financial provides capital advisory and lending solutions for real estate investors. This information is for general informational purposes only and does not constitute an offer to extend credit or a commitment to lend.

All loan programs, rates, terms, and conditions are subject to change without notice and may vary based on borrower qualifications, property characteristics, and market conditions. All loan applications are subject to underwriting approval, including verification of credit, assets, and property details.

DSCR and investment property loans are intended for business or commercial purposes and are not for personal, family, or household use. Not all borrowers or properties will qualify. Programs may not be available in all states.

Sphynx Financial does not provide legal, tax, or financial advice. Borrowers are encouraged to consult with their own advisors regarding their specific situation.

Sphynx Financial operates as a capital advisor and may place loans with third-party lenders. Terms, approvals, and funding are subject to those lenders’ guidelines and requirements.

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