Before you start shopping for a home, it’s essential to get pre-approved by a mortgage lender to get a concrete idea of the loan amount, interest rates, and available loan programs. A pre-approval is different from a pre-qualification. The pre-approval process involves gathering information (income and asset documents along with a credit report) to confirm you are pre-qualified, whereas pre-qualification does not include the same paperwork.
Before making an offer on a home, real estate agents will verify the potential buyer has completed a full pre-approval with a reputable lender. Before you start the pre-approval process, ensure you have the necessary paperwork compiled and be ready to fill out the loan application.
Residential History
Most lenders will ask for your residential history, which includes addresses where you have lived over the past two years, as well as the contact information of your previous landlords.
Personal Assets
Statements from your checking, savings, and other bank accounts two months before the application date will be required. Additionally, other asset statements (past two months), including certificates of deposit, individual retirement accounts, stocks, bonds, and other securities, should be disclosed. Cash on hand is not acceptable; a clear paper trail will be required for large deposits. Any real estate holdings (property address, current market value) need to be disclosed to the lender, along with a copy of the mortgage and homeowner’s insurance statement and the most recent HOA payment if applicable.
Employment and Income History
Crucial to the pre-approval process, these documents prove the borrower’s ability to repay the loan. It is ideal to work in the same industry for the past two years; your most recent paystubs, along with a W-2 form, are necessary as well. If the borrower is self-employed or works on commission, they will have to provide the last two years of income tax returns, profit and loss statements, balance sheets, along with employment verification.
Personal Debt
Borrowers’ credit reports will be examined to understand their monthly debt, which is a factor in terms of how much they can afford. New monthly debts or those that might not show up on a credit report (auto or student loans, credit card statements, etc.) are also required.
Down Payment
Limited budgets can be accommodated with mortgage programs for those without enough monetary funds to cover a down payment. Down payment assistance (gifts) can be given from family members; they must complete a gift letter to confirm, however.
EB Mortgage is a locally owned mortgage company with experts in new home purchase, refinancing, and commercial loans. Our wholesale rates can’t be beaten. We offer more products, more options, and more solutions. Our “3C” Process is simple: complete our pre-approval request, consider options based on your requirements, and choose the offer that suits your needs best. Call us at 866-246-0516 or e-mail contact@ebwmtg.com today.
Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.