What You Need So You Can Be Pre-Approved for a Mortgage

Posted by harryjason on September 3rd, 2016

Potential buyers can really benefit by consulting with a lender and getting a pre-approval letter before you go to an open house.

To start with, you’ll be able to discuss your loan options with the lender. In addition, your lender will also be able to check your credit rating and inform you if there are any problems. And that’s not all. You’ll also be informed about the maximum amount you can loan so you’ll know exactly how much you can afford to buy when shopping for Pensacola or Gulf Breeze FL real estate.

Knowing the Difference Between Pre-Qualification and Pre-Approval

You may be a bit confused of these two terms. A mortgage pre-qualification is helpful because it can provide you with an estimate as to how much you can afford to buy. On the other hand, a mortgage pre-approval means your credit has already been checked by a lender and they have verified your documentation and approved a specific loan amount. Take note that this pre-approval is only good for 90 days and the final approval will only happen when you have the appraisal and you have actually applied a loan to a particular real estate.

The following are the requirements you need to complete before you seek a mortgage pre-approval:

1. Proof of income

You should prepare your W2 statements for the past 2 years, as well as your pay slips to show that you are actually earning money now. If you have proof of additional income such as bonuses or an alimony, you need to furnish the lender with these documents as well.

2. Proof of assets

Present the lender with investment account statements and bank statements to show that you have money for the down payment and closing expenses. You should also have proof of cash reserves.

3. Good credit standing

A lot of lenders today reserve the lowest interest rates for those with a high credit score (at least 740). If you have a low score, you may need to set aside a higher down payment.

4. Employment verification

Even if you show the lender your pay stubs, they may still ask you to provide your employer’s information so they can call them and verify that you are still employed. Lenders would only lend money to those with stable employment and those who are self employed should provide a lot of additional paperwork.

5. Other documents

Your lender will need to have a copy of your social security number and driver’s license. They will also need your permission to check your credit report.

Whether you are planning to buy Pensacola or Fort Walton Beach Real estate, getting a mortgage pre-approval will work to your advantage.