Shopping for a home can be exciting. You just never know when the house of your dreams will come along. But, when it does, you will want to be ready to make an offer on it – so that it doesn’t turn out to be the “one that got away.”
One of the best ways to ensure that you are ready to make an offer quickly and with confidence from a financial standpoint is to obtain pre-approval for a mortgage. That way, you will already know the maximum amount that you can borrow. Pre-approval can also provide you with a step ahead of other potential bidders for a property who may not yet have gone this route.
In order to become pre-approved for a mortgage, a lender will need several key pieces of information from you. These will include the following:
- Proof of Income – The lender will require proof that you will be able to repay the loan. So, they will typically ask you to provide them with your W-2 statements from the past two years, as well as your recent pay stubs. If you bring in any additional income, such as alimony, be sure to provide proof of this as well. You will also need to provide the lender with verification that you are employed.
- Tax Returns – The lender will also require that you provide them with your two most recent years’ tax returns.
- Proof of Assets – Lenders also want to be assured that you have some type of savings and / or other financial reserves. Therefore, they will want you to provide them with recent bank and investment account statements. This will also show the lender where your funds for the down payment and closing costs will come from. (If you will be receiving funds from a relative or other source, you will require a “gift letter” in order to prove that these funds are not a loan that needs to be paid back).
- Credit – The lender will also want to check your credit in order to ensure that you pay your bills on time. In most cases, lenders will require a borrower to have a credit score of at least 620 or higher in order to approve an FHA loan.
While it may take some time to gather all of this information and go through the pre-approval process, it can be well worth it if it helps you to obtain the home you really want at a price you can comfortably afford.
For more information on finding your dream home within your specific budget, give us a call.