Why is it important to get preapproval as early as possible?
- Asking to be preapproved for a mortgage is your first chance to find out where you stand, you find out how much you can borrow.
- It has been found that about 50% of the credit reports contain inaccuracies and such errors can really minimize your chances of getting a loan.These inaccuracies can also increase the rates, in case you do get the loan. It will be in your interest to locate these mistakes at the earliest so that they can be rectified on time.
- If you begin your serious search for a new home with a written loan pre-approval in hand, you will see a new level of respect and service from.sellers and real estate brokers.
They know you are:
a) a serious, qualified buyer, not just a “tire kicker”
b) you have eliminated much of their concern or questions over whether you can get financing to complete a home purchase.
They know your financial situation has already been examined and one or more mortgage lenders want to make you a loan.
What are the requirements for the preapproval process?
Mortgage lenders normally want to see copies of the following documents:
- W2s from the last 2 years
- Tax returns from the last 2 years
- Pay stubs from the last 30 days
- Bank and brokerage statements from the last 3 months
You fill out an application that asks how much you make, how much you’ve saved and how much you owe on everything from cars to school ,loans to credit cards. The lender evaluates that info, checks your credit reports and credit scores, and replies with a letter that says you can qualify for a mortgage and how much it’s willing to loan.
The process is usually free, and being preapproved boosts your credibility with real estate agents and sellers who don’t want to waste their time on buyers who may not be able to get financing. Whether you apply in person or online, through a bank or a mortgage company, the information you’ll have to provide is pretty much the same.
You’ll be asked:
- For your street address, e-mail address, phone and Social Security number. If you’ve lived at your current address for less than three years, the lender will want to know where you lived before that. If you are buying this home with someone else, they’ll probably want to know your relationship to any co-borrowers.
- Whether you currently rent, own or live with family.
- How many dependents you have.
- Your annual income.
- Whether you are a first-time buyer
- Your occupation, employer and how long you’ve worked there. If you’ve been with the company for less than two years, it will ask where you worked previously.
- Your assets — what you own and what it is worth. This includes your current home and other property, checking and savings accounts, stocks, bonds and retirements accounts.
- Your liabilities — how much you owe, to whom and how much you pay every month.
- Whether you have filed for bankruptcy in the last 10 years.
- Whether you are behind on any bills.