Getting Pre-Approved for a Mortgage: What You Need to Know
Getting pre-approved for a mortgage will tell you up front what you can afford when shopping for your next home. This will save you a lot of time and stress. A pre-approval letter also helps let real estate agents know that you are a credible buyer, and you’re able to act quickly when you find your dream house. Here’s what you need to know to get pre-approved.
- Know what documents are needed: proof of income (W-2 statements from the past two years, recent pay stubs, proof of any additional income, two most recent years of tax returns, etc.), proof of assets, employment verification and additional documentation such as your driver’s license and social security number.
- Get your credit score in check. If your score is more than 740, you may be able to get a lower interest rate, because most lenders reserve the lowest interest rates for buyers who have the best credit scores. Most buyers need a credit score of at least 620 to get approved for a home loan.
- Know what to expect from your mortgage lender, and what they should expect from you. The best lenders are more collaborative and explain all options available to you. When they check your credit report, they should be able to give you sound advice on how to improve your credit profile.
- A good lender should also be able to give you info. on how to handle your money between your loan application and closing day. Lenders expect you to be prepared with documents they may need, and they also need you to be honest about your finances. Even if it doesn’t seem important to you, you still need to comply with their requests in order for them to be able to help you.
Not sure where to get started? Ask your real estate agent for referrals to experienced, reputable lenders in the area, including mortgage lenders for specific banks or institutions as well as mortgage brokers who represent multiple lenders. Good luck and happy house hunting!