To have the best chance of a mortgage pre-approval, you need to make sure you provide all the right documents to your lender. That way a mortgage pre-approval can be granted more quickly, and you can decide on a house you really want to buy. It’s the start of getting into your dream home, and it’s important to focus on the value of the pre-approval. There are specific documents that your lender will request, and some ask for more documents up front than others. That will depend on the lender, so make sure to ask them what exactly they need. A lot of lenders have checklists they can give you, so you can collect everything and bring it to them all at the same time.
Can you prove your identity?
One of the most important things your lender will ask for is some proof of who you are. Anyone can get something with a name on it, but you’ll generally need a government issued ID (such as a driver’s license). You’ll also be asked to provide your social security number. Whether the lender asks to see the card or simply accepts the number you provide will be up to that individual lender. Either way, you must give the number that legally belongs to you. Make sure you double check that it’s correct. If you don’t have a social security number, ask the lender what other documentation they will accept. Some lenders are more flexible than others, and it’s important to know what your options are.
How does your income look?
When you’re focused on buying a great home, you don’t want to think about a lot of other things, but you still have to show the lender that you make enough to buy the house you want. Your income may be high, but it also has to be provable. In other words, if you get paid in cash a lot and don’t claim it on your taxes, it may look like you don’t make enough to get your loan. You can show income through your W-2 forms, your 1099s, or other approved methods. Your lender may also want to see your bank statements, to see if there are odd deposits or withdrawals that don’t fall into line with the income and debts you state that you have. Lenders are very careful only to loan to people who can actually afford what they want to buy.
Do you have a lot of debt?
You’ll need to give your lender information about the debts you have. Some people make a lot of money, but they also have a lot of big bills to pay. There’s no guarantee that a high income will let you buy an expensive home, so make sure you work with your lender to see what you’re really approved for. You may need to scale back your expectations on what you’re able to afford when you have high levels of debt. Another alternative if you have a good income is to put a larger amount down on the house you want to buy, or pay off some of your debts so you have the opportunity to qualify for a larger home loan. That can let you purchase what you are really looking for.
Have you paid your taxes lately?
Your tax returns can provide important information about your income. If you work for someone else your lender may not request them, since they can see your W-2 forms. If you’re self-employed, though, your lender will want to see at least two years of tax returns, in order for you to prove your income. Some lenders are very cautious, and request income tax returns for traditionally employed borrowers, as well. As with any profession there are differences in what companies require, and some lenders will be more strict about their criteria than others. However, all lenders will be very similar, because they have rules and guidelines they must follow in order to loan to buyers and then be able to sell those loans to others.
Is your credit good?
Good credit is very important when it comes to the pre-approval process. Your credit doesn’t need to be perfect, but it does need to be decent. Lenders will look for things like bankruptcy filings, unpaid collections, foreclosures, and similar problems, but even a history of paying your bills late can mean that your credit score drops below what you need in order to get a mortgage. Checking your credit and fixing any mistakes or serious problems before you apply for a mortgage pre-approval is a good idea. The purchase of your next home can be less stressful when you know what your lender will need from you and are prepared to provide the documents quickly. Then you’ll know very soon whether you can qualify for the house you’ve fallen in love with.
2 Point Highlight
To have the best chance of a mortgage pre-approval, you need to make sure you provide all the right documents to your lender.
Once you get a pre-approval, you may still need to provide other documentation to your lender in order to actually close on your loan.
