Thinking of buying a home? The first step in the process is to talk to a lender. Getting pre-approved shows the seller that one is a committed buyer, since you have mortgage financing already lined up and can therefore make an offer to a home in which you are interested. Otherwise, the prospective buyer would have to go out and apply for a mortgage before making an offer and potentially lose the opportunity to bid on a home.
Things You Need to Be Pre-approved for a Mortgage
To get pre-approved for a mortgage, you'll need proof of assets and income, good credit, and employment verification. Having these documents ready will help your lender determine your mortgage.
1. Proof of Income
Buyers must produce W-2 from the past two years, recent pay stubs that show income as well as year-to-date income, proof of any additional income such as alimony or bonuses, and the two most recent years' tax returns.
2. Proof of Assets
The borrower needs bank statements and investment account statements to prove that they have funds for the down payment and closing costs, as well as cash reserves.
3. Good Credit
Most lenders require a FICO score of 700 or higher to approve a conventional loan. The higher your credit score the lower your interest.
4. Employment Verification
Lenders want to make sure they lend to borrowers with stable employment. A lender will not only want to see a buyer's pay stubs but also will likely call the employer to verify employment and salary.
Self-employed buyers will need to provide significant additional paperwork concerning their business and income. Typically, self-employed borrowers need to produce at least the two most recent years' tax returns with all appropriate schedules.
A mortgage pre-qualification can be useful as an estimate of how much someone can afford to spend on a home, but a pre-approval is much more valuable. It means the lender has checked the potential buyer's credit and verified the documentation to approve a specific loan amount (the approval usually lasts for a particular period, such as 60 to 90 days). Final loan approval occurs when the buyer has an appraisal done and the loan is applied to a property.
I do hope this has been informative, please do write to me at jr.homesold@gmail.com for any further questions or contact me at Jayshree Reddy - 408-489-6812. I'm a real estate agent based in San Jose, California.
| About Author |
|
|
I Live in San Jose. After a Long stint in Tech & Education moved to Real Estate in, Bay Area California.
I hope my expertise will come of help to you and you loved ones.
|
Website: https://jayshreereddy.exprealty.com/
Disclaimer: Please use this channel at your own discretion. These articles are contributed by our users. We are not responsible or liable for any problems related to the utilization of information of these articles.
View All Contributions
|
|
|
