When applying for a mortgage, there are two steps you need to do to prepare: get pre-qualified and get pre-approved. Pre-qualification is an estimate of how much you can spend on a home, but a pre-approval is more valuable because it shows that a lender has already assessed and approved your financial situation.
So, how do you get pre-approved? Here’s a list of five things you’ll need:
Proof of Income: this includes W-2 wage statements from the past two years, recent pay stubs that show income and year-to-date income, proof of any other income, and tax returns from the last two years.
Proof of Assets: you’ll need bank statements and investment statements that prove you have enough funds for a down payment, closing costs, and cash reserves for your monthly payment.
Good Credit: most lenders require a FICO score of 620 or higher to approve a conventional loan, and some may even require that for an FHA loan. The higher your FICO score is, the lower your interest rate.
Employment Verification: lenders like to make sure that borrowers have a stable income, so not only will you need to provide pay stubs, but they may also call your employer to verify your employment and salary.
Other Documentation: the lender will need to copy your driver’s license and will need your Social Security number and signature to pull a credit report. You may also need to provide additional paperwork at a later time, if requested.
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