Home Financing Checklist: How to Get Preapproved for a Mortgage
Buying
Learning how to get pre-approved for a mortgage can save you time, hassle, and stress down the road. In addition to giving you the upper hand on other, less prepared buyers, learning how to get pre-approved for a mortgage can also help you plan your finances and keep your fiscal house in order.
How to Get Pre-approved for a Mortgage: 5 Critical Steps
1. Gather proof of income
To get pre-approved for a mortgage, you’ll need proof of income. Be prepared to present pay stubs, past W-2s, bank statements, and documentation of any and all investment and retirement accounts you hold. This helps verify the loan you can qualify for and keep your debt-to-income ratio in check.
2. Determine your down payment
To get pre-approved for a mortgage, you’ll need to have an idea of how much you can put down on the home. Your lender may ask for bank statements and gift letters to determine that the money in your account is yours, and you may be asked to provide additional information to prove that you do indeed have the funds needed to pay your down payment.
3. Pull your credit report
If you have a credit score of above 740, you can look forward to great interest rates on your mortgage. Because your credit score influences the outcome of your mortgage loan so heavily, it’s critical to ensure that you know what your credit score is heading into the mortgage process. If you have a credit score of below 620, it’s wise to put the home-buying process on hold until you can boost your credit score.
4. Compile employment verification
Mortgage lenders want to be sure that you’re employed and that your salary is adequate to afford for the purchase of a home. Because of this, you’ll need to supply your lender with information about your employment situation and be prepared for the lender to contact your employer. If you’re self-employed, you’ll need to provide profit-and-loss statements and any other information your lender requires.
5. Provide additional paperwork
Every mortgage situation varies, and your lender may want to see additional paperwork to verify income or employment. Be prepared to provide this as quickly as possible to keep the mortgage process moving smoothly.
When you’re learning how to get pre-approved for a mortgage, flexibility is key. While these five tips will help you prepare, it’s always possible that you’ll be asked to do or supply something additional, and being flexible enough to accommodate this ensures that the lending process will move along smoothly.
