Getting pre-approved for a mortgage can be an intimidating process, but it is a crucial step in buying a home. The pre-approval process will give you an idea of how much you can afford to borrow and what your monthly payments will look like. Having your pre-approval is crucial for home shopping, as it needs to be attached to your offer. In this blog post, we’ll go over the steps you need to follow to get pre-approved for a mortgage.
Step 1: Check Your Credit Score
Your credit score is a crucial factor in getting pre-approved for a mortgage. A good credit score is usually considered to be above 700. Before you start the pre-approval process, it’s important to check your credit score and address any possible issues. Your lender will provide a more accurate picture of your credit score by pulling it, as opposed to relying on online services.
Step 2: Gather Financial Documents
The next step is to gather all of your financial documents, including tax returns, pay stubs, bank statements, and other relevant financial information. You’ll need these documents to provide the lender with a complete picture of your financial situation.
These are the basics the lender will need:
- 2 years tax returns if self-employed or commission
- 2 most recent W2s
- 2 most recent year-to-date paycheck stubs
- 2 most recent bank statements for all checking, savings and retirement accounts
- Copy of photo IDs
- One other ID (social security card, birth certificate, etc.)
- Loan information of other real estate owned
- Divorce decree and 12 months’ proof of child support, when applicable
- Name and address of each employer – past 2 years
Step 3: Shop Around for a Lender
It’s important to shop around for a lender who offers competitive interest rates and has experience in the type of mortgage you’re seeking. You can compare rates and terms from different lenders to find the best one for you. Check out our resource page for a list of lenders we recommend.
Some of the different types of loans your lender will advise you on are Conventional, FHA, USDA/Rural Development, VA, and Jumbo Loans.
Step 4: Complete a Loan Application
Once you’ve found a lender, it’s time to complete a loan application. You’ll need to provide the lender with all of the required information and documentation. Be prepared to answer questions about your income, employment history, and other financial details. Don’t be shy, Life Happens, and the lender understands that! If you don’t tell the lender, they will find out, and it may delay your progress.
Step 5: Get Pre-Approved
The lender will review your financial information and credit score and determine if you are eligible for a mortgage. If approved, you’ll receive a pre-approval letter that shows the amount of mortgage you are approved for, as well as the interest rate and other loan terms.
Pro tip: Tell the lender what monthly note you would be comfortable with. They will then be able to tell you what price range you need to be looking in.
Step 6: Receive a Pre-Approval Letter
A pre-approval letter is an important tool when shopping for a home. It shows the seller that you are a serious and qualified buyer, and it gives you an idea of how much you can afford to spend.
Step 7: Use the Pre-Approval Letter
When shopping for a home, you can use your pre-approval letter to make an offer on a property. It’s important to keep in mind that pre-approval does not guarantee final loan approval, and the terms of the loan may change based on further review and appraisal of the property.
In conclusion, getting pre-approved for a mortgage is an important step in buying a home. By following these steps, you’ll have a better understanding of how much you can afford to borrow and what your monthly payments will look like. With the right preparation and guidance, the pre-approval process can be a smooth and stress-free experience.
Next is Step 3: Finding Your Dream Home
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