Pros vs Cons of Early Pre-Approval

[Sean McKee]

Hi BP Community,

I am a soon to be first-time home buyer currently working with a family friend to buy his house and have some questions surrounding the pre-approval process. The agreement of sale is currently being written up by a real estate attorney, since this is a FSBO. With the expected closing date of July 31st, is it too early to get pre-approved?

The earlier I get pre-approved, the more time I will have for negotiating a better deal between lenders. One question here is, how many days before the closing date do I need to tell a lender I want to finalize the mortgage with them?

However, I have some concerns about getting pre-approved too early. First, I understand most pre-approval letters would expire before the closing date. Would this require an extra hard credit pull to get pre-approved again? Second, I have around $25k in cash and $100k in retirement accounts. I plan to add around $2.5k per month in both cash and retirement accounts. This would bring me to around $32.5k in cash and $107.5k in retirement accounts at the time of closing. I have seen most lenders do not count 100% of retirement account assets towards the overall assets. Would the increase in total assets have a big impact on the rate I receive from lenders?

Any advice on the timeline of when I should get pre-approved and what factors to keep in mind is greatly appreciated!

Thank you,

Sean