Getting Pre-Approved for a Home Loan

If you are starting your home search as a serious buyer, you want to consider getting pre-approved for a home loan. It requires a bit of work upfront but can streamline the process and make purchasing your home that much easier in the end.

What does it mean to be pre-approved?

When you get pre-approved, it means that your lender has thoroughly reviewed your information and has approved your home purchase. Typically, lenders set a cap on the maximum amount you can borrow. They guarantee approval as long as your financial situation remains unchanged.

As the buyer, getting pre-approved is for your benefit and is not specific to any particular home.

To obtain an official approval and clear to close, you will still be required to provide additional documentation. This can include greater detail about some financial information, such as your expenses and income.  It means getting more information about your house to make sure that it meets the requirements your lender has set.

What do I need to get pre-approved?

To review and process your pre-approval, your lender will provide you with a specific list of documents and information required. Includes:

• Proof of income: This can be a W-2, tax return, or self-employment income sheet. While the specifics may vary depending on the situation, you will need to demonstrate that you have sufficient income to support the purchase.
• Employment verification: Just like you have to show your income, you also need to show that you are employed and expect to remain so in the future. If you are self-employed, expect to provide more information and documentation about your work.
• Proof of identification: Your lender will need to make sure that you are who you say you are. This can be provided through a copy of your driver’s license or other photo ID. You will also need to provide your social security number to run your credit history.
• List of assets: Bank statements show your position going into the loan. Your lender wants to know that you have enough money to cover the down payment as well as adequate cash reserves.
• Credit check: To get a pre-approval letter, your lender will need to get your credit score. This is a required part of the home buying process for all reputable lenders and is best done early in the process to make sure that there aren’t any issues.