Looking for a house before getting pre-approved for a mortgage is like walking into a grocery store without a wallet. There’s nothing more disappointing than finding your dream house and then discovering you can’t afford it. To ensure that you have the best shot at getting the home you want, you need to obtain a mortgage pre-approval from a lender. It is a reasonable assurance you’ll be approved for a loan.
Here are the 5 things you’ll need to get pre-approved for a home loan:
- Proof of income. A record of employment income such as a paystub, T-4 slip or a personal income tax return (if you are self-employed, at least two years of Personal Income Tax Returns and Financial Statements) Proof of any additional income such as alimony or bonuses.
- Proof of assets. To prove that you have funds for the down payment and closing costs, you will need to present bank statements and investment account statements as well as cash reserves. Assets may include vehicles, retirement savings account, jewelry, collections and other real estate holdings.
- Your credit score. The loan officer will actually do this part for you! You’ll need to provide them with some key information so they can pull your credit. A “good” credit score depends on the scoring system used by your particular lender. Different scoring systems use different scales, and they each develop their own credit score range. Customers with a higher credit score will be able to get lower interest rates which will affect how much you can afford.
- Employment Verification. Not only will your loan officer want to see your pay stubs, but they are likely to call your employer to verify if you’re still employed and check on your salary. Today, lenders want to make sure that they are loaning money only to borrowers with stable employment. Borrowers who are self-employed still need to provide additional paperwork concerning their income and business.
- Be ready to provide any additional paperwork requested by the loan officer as quickly as possible. The more cooperative you are, the smoother the transaction will be and the sooner you can find your new home.
The bottom line is by getting a pre-approval first before looking for a house can save a lot of disappointment and heartache later. By doing so, you also have an opportunity to discuss loan options and budgeting with a professional. If you’re interested in talking with a loan officer to learn about your credit score, you’re price point, or a home mortgage, Click here to contact our trusted loan officer John Roehrich.