Can You Shop Around for a Mortgage After Preapproval?

A preapproval letter doesn't lock you in to one lender.

A preapproval letter doesn't lock you in to one lender.

You're ready to buy a home and you're seeking a preapproval letter from a mortgage lender. This letter will show exactly how much mortgage money a lender or bank is willing to lend you. The good news is that once a mortgage lender preapproves you for a loan, you can still shop with other lenders for better rates and fees.

Why Preapproval Matters

Buyers seek preapproval letters from mortgage lenders for two main reasons. First, the preapproval letter states exactly how large of a loan a lender will provide buyers. Armed with this information, buyers now know how expensive of a home they can afford. They won't waste their time looking at residences outside their price range. Secondly, a preapproval letter gives buyers leverage when they are competing against other buyers for the same house. When sellers receive multiple offers on a home, they are more likely to accept the bid that comes from a buyer who has a mortgage preapproval letter. Such a buyer has already been vetted by lenders, and there's less of a chance of lenders denying this buyer's loan application.

The Preapproval Process

Preapproval differs from prequalification: In a prequalification, lenders don't check your finances. They take your word for how much you make, how much you owe and what assets you own. In a preapproval, lenders verify your financial information before deciding how large of a loan they can give you. You'll have to provide lenders with copies of your recent paycheck stubs, income-tax returns, credit-card bills, bank statements, retirement-account statements and other pertinent financial documents. Your lender will also check your credit in a preapproval.

Shopping Around

Once you've gained a preapproval letter, you are free to shop around with other lenders for better interest rates and fees. A preapproval letter does not lock you into a loan agreement with the lender that approved it.


A preapproval remains valid for a set period of time, a time period during which you can continue to shop around with other lenders. This time period varies, but preapprovals often expire 90 days after lenders make them. You might also have to pay a small fee -- some lenders charge $18 for running your credit -- for a preapproval. If you eventually take out a loan with another lender, you'll lose this fee. If you end up taking out a loan with the lender that gave you your preapproval, the fee is often refunded when the loan closes.


About the Author

Don Rafner has been writing professionally since 1992, with work published in "The Washington Post," "Chicago Tribune," "Phoenix Magazine" and several trade magazines. He is also the managing editor of "Midwest Real Estate News." He specializes in writing about mortgage lending, personal finance, business and real-estate topics. He holds a Bachelor of Arts in journalism from the University of Illinois.

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