How to Get Pre-Approved on Your Home Loan
In order to get pre-approved, you’ll need to contact a lender. The lender will review your credit reports, your employment history, and your income — and then determine which loan programs you qualify for, the maximum amount you can borrow, and the interest rates you will be offered. Obtaining pre-approval means that the lender is confident in your ability to pay off a loan.
Information to Provide for the Pre-Approval
This process is a simplified version of what you will ultimately go through to get approved for your final loan. Lenders are generally interested in your financial history for the last two years: two years of pay stubs, taxes, and residency. Information on your current assets and bank statements from any savings or investments are required as well. Also, a valid photo ID (Driver’s License, Passport,) and social security number for a credit check.
What to Do With Your Pre-Approval
In many cases, the lender that gives you your pre-approval is the one that approves the final loan, but not always. Some borrowers, learning more about the process, decide to go with another lender. You should feel free, before the loan is locked in, to consider competing offers.
The pre-approval gives the home buyer an idea of what their monthly payments, down payments, and terms will look like. The pre-approval is not just what you think you can afford, but what you can actually afford. A pre-approval letter is a great way to show agents and sellers that you have the resources and are serious about buying a home.
How to Get Pre-Approved by a Lender
It’s all in the paperwork & preparation
Obtaining a mortgage requires an extensive accounting of your personal and financial life. The mortgage application can appear to be a daunting prospect, but a little organization in your files and paperwork can go a long way. Go over this list of information and documentation required to apply for a loan, and get a jump on your application.
Information for the Federally Required Mortgage Application
- Full Name, Birth Date, Social Security #, Phone Number
- Number of children, their ages, marital status
- Residence history for the last two years; for renters, this includes landlord’s name and monthly rent. For homeowners, all mortgage, tax and insurance info for all properties owned.
- Two years of employment history: companies, addresses, titles held, contact
- Two years of income: includes bonuses, commissions, and self-employment
- Account Balances for all banking: checking, savings, retirement, investments
- Current fixed debt: credit cards, mortgage, car payments, alimony, child support, student debt
- Documentation of bankruptcy (in the last seven years), lawsuits, or a co-signer on any property
- If a percent of the down payment will be borrowed
Documentation Required to Obtain the Loan
- Written authorization for the lender to run a credit report
- Written explanations for anything derogatory in the credit report
- Discharge papers from Bankruptcy (if in the last seven years)
- For renters, 12 months of canceled rent checks from landlord, or a form confirming on-time rent payments
- If renting to others, applicable lease agreements and bank statements
- If selling while buying, confirmation of the listing agreement
- 30 days of pay stubs
- Two years of W2 forms
- Two years of personal federal tax returns
- For the self-employed, two years of business tax returns
- For the self-employed, year-to-date profit and loss statement
- Documentation of child support and alimony payments, and divorce decree
- Two months of bank statements from checking, saving, retirement, and investment accounts
- If you are receiving gift funds, a statement from the giver confirming the gift is a gift and not a loan
How Your Credit Score Could Affect Your Ability to Obtain a Loan
If you know your credit score, this general breakdown will give you an idea of what you could be working with.
720+ Excellent Credit: Should easily qualify for a variety of mortgages, obtain good interest rates and low fees.
680 – 719 Good Credit: Most likely able to qualify, with a decent interest rate and standard fees.
620 – 679 Fair Credit: A chance to qualify, with fewer options, higher interest rates and fees.
580 – 619 Poor Credit: Difficult to qualify, with much fewer options, higher interest rates and fees.
350 – 579 Bad Credit: Unlikely to qualify for a mortgage, with some exceptions.
Mortgage Blog Articles
How to Find a Lender
Using Homes.com professional search functionality you can find lenders across the US. Information for local mortgage professionals can also be found on each of our property detail pages, as well as through the recommendations of your real estate agent or brokerage.
Are There Any Homes That Don’t Require A Mortgage?
Not all home purchases require a mortgage, but for most buyers a mortage is the easiest and most logical option for affording a home.
Open Houses & Agent-Accompanied Tours
Basics That Every Home Buyer Needs to Know
By this point in the homebuying process, you’ve found a realtor you can trust, have been pre-approved for a mortgage, and understand how much house you can afford. It’s time to get off the Internet and do a physical walk-through of a few likely home candidates.
How Do I Prepare/What Do I Bring to the Walk-Through?
Most pre-approval offers expire in 60-120 days, so from the time of your pre-approval, the clock is ticking. When it comes to house hunting, saving time is not wasting time. Be thorough, but be organized. There is no overall average on how much time you should spend on a walk-through, but whatever you spend, don’t rush it. Remember – you cannot view 10 properties in an hour; it’s just