How long does mortgage pre-qualification take in 2014? Or does it vary?

Reader question: “My brother who is a real estate agent told me to get pre-qualified for a mortgage before I start looking at homes. What does this process involve? How long does mortgage pre-qualification take these days (2014)? I’ve heard everything takes longer these days, due to new lending rules.”

You can get pre-qualified on a lender’s website just by filling in a short form with basic information about your financial situation (monthly income, recurring debts, desired loan amount, etc.). So it doesn’t take long at all. A loan officer or mortgage broker might also sit down with you in person, or speak to you over the phone, to do a quick pre-qualification. That doesn’t take very long either. They’ll just get some basic information about your finances and plug it into a calculator. So you’re looking at an hour, on the long end.

But you shouldn’t put too much stock into this process. Here’s why:

Mortgage pre-qualification doesn’t take very long in 2014. It never has. Nor does it mean much. It’s just a quick look at your financial picture to see how much money you MIGHT be able to borrow. Might is the key word in that sentence. In most cases, the lender doesn’t even check your credit or verify your income when pre-qualifying you. It’s a quick number crunch, and nothing more.

Keep in mind that the pre-qualification process is different from the pre-approval. The former is a quick review of your finances to give you an estimated loan amount you might qualify for. The latter (pre-approval) is a more in-depth review of your finances, and a firmer commitment from the bank.

According to Erin Lantz, director of Zillow’s Mortgage Marketplace: “[Pre-qualification] is important because it helps you narrow down your options and focus on how much house you can really afford. But it’s not a commitment between you and the lender whatsoever.”

Mortgage pre-approval, on the other hand, goes a lot of further. This is where the lender actually checks your credit and requests documents to verify your financial information (primarily your income, assets and debts). It takes longer than pre-qualification, but it carries more weight too. It is a more in-depth review of your finances, and a firmer commitment from the bank.

But the thing to remember is that neither of these processes guarantee you’ll actually get the loan. You won’t know that until you clear the underwriting, which occurs in the middle of the lending process. The pre-qual happens on the front end. Then comes underwriting. Then comes the closing process, when the deal is finalized. A lot can happen between pre-qualification and closing.

Sellers won’t care that you’ve been pre-qualified by a lender, because it’s such a cursory process. But if you have a pre-approval letter from that same lender, sellers will take your more seriously. The pre-qual might be a good way for the lender to attract borrowers and capture their contact information (especially when it is conducted online). And it might give you, the borrower, a ballpark idea as to the amount you can borrow. But that’s about as far as it goes. Pre-approval goes further, and is therefore a better use of your time and energy.

You can expedite the process by asking what the lender needs from you in advance, and rounding up all of that information prior to your meeting (or prior to applying online, if you go the internet route). In most cases, this includes your W-2 statements for the last two years, some proof of income such as pay stubs, and any other financial / asset documentation you have.

But getting back to your question. How long does mortgage pre-qualification take? A few minutes at most. The real question is, what good is it?