What do you need to provide for mortgage pre approval?
When applying for a mortgage, pre-approval is a crucial step that can make the process smoother and more efficient. Pre-approval is essentially a conditional commitment from a lender to provide you with a specific loan amount, subject to certain conditions. To obtain pre-approval, you’ll need to provide several key pieces of information. Here’s a comprehensive guide on what you should be prepared to provide.
1. Financial Documentation
The first and most important set of documents you’ll need to provide for mortgage pre-approval is financial. This includes:
– Proof of income: W-2 forms, tax returns, and pay stubs for the past two years. If you’re self-employed, you’ll need to provide tax returns and financial statements for your business.
– Proof of assets: Bank statements, investment account statements, and retirement account statements to verify your savings and liquid assets.
– Proof of liabilities: Credit card statements, student loan statements, and any other debts you may have.
2. Credit History
Your credit history is a significant factor in determining whether you’ll be approved for a mortgage and what interest rate you’ll receive. To provide for mortgage pre-approval, you’ll need:
– A copy of your credit report: You can obtain a free copy from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once a year.
– A credit score: This is often included with your credit report. A higher credit score can lead to better interest rates and loan terms.
3. Employment Information
Lenders want to ensure that you have a stable income and job history. To provide for mortgage pre-approval, you’ll need:
– Proof of employment: Recent pay stubs, tax returns, or letters from your employer confirming your employment status, salary, and length of employment.
– Information about your current job: Your position, salary, and length of time in your current role.
4. Down Payment and Reserves
Lenders will also want to know how much money you have for a down payment and any reserves. To provide for mortgage pre-approval, you’ll need:
– Proof of down payment: A bank statement or other documentation showing the source of your down payment funds.
– Proof of reserves: Documentation showing you have enough funds to cover your mortgage payments for a certain period, typically two to three months.
5. Additional Information
In some cases, lenders may request additional information, such as:
– Information about the property you’re interested in: The address, purchase price, and estimated value.
– Information about other borrowers: If you’re applying with a co-borrower, you’ll need to provide their financial information as well.
By gathering and providing these documents, you’ll be well-prepared for the mortgage pre-approval process. This will help you understand your borrowing capacity and give you a clearer idea of what to expect when you start shopping for a home. Remember, being organized and thorough with your pre-approval application can save you time and money in the long run.
