What First-Timers Need to Know About Pre-Approval

What First-Timers Need to Know About Pre-Approval | IgeJohnson.com

Buying a home is big deal. Buying your first home? Very daunting.

If you want to make the buying process as smooth sailing as possible, it’s very important to prioritize getting pre-approved for mortgage.

What is pre-approval?

A mortgage pre-approval is a piece of documentation proving that a lender has examined your financial background including your income, assets, and debt and has committed to lending you a specific amount of money to buy property.

Why do you need to a pre-approval?

There are many benefits to getting pre-approved:

  1. You’ll know how much you can afford.

    You definitely don’t want to spend so much time and effort looking for homes and then when you finally found that perfect house, you find out that you can’t afford it. A pre-approval gives you the security of knowing what price range you can look into.

  2. You’ll be prepared for the other costs involved in buying a house.

    A pre-approval gives you a list of things you will need to pay on top of the house cost. This includes the title insurance and other closing fees.

  3. You’ll get a competitive advantage over other buyers.

    If you’re looking for property in a lucrative market, a mortgage pre-approval can really spell the difference between getting your dream home or losing it to a more “qualified” buyer. A pre-approval signals the home seller that you’re a solid candidate.

Preparing to get pre-approved

Now that you know why you need to get pre-approved, it’s time for you to learn what a mortgage pre-approval requires.

Getting pre-approved requires a lot of paperwork. Your lender will ask you to provide them with several documents so that they can make sure you’re qualified for a loan and so they can give a fair assessment of how much they’re willing to let you borrow.

Here are some of the documents you need to prepare:

  • Proof of identity (e.g. Driver’s License or Passport)

  • Proof of employment

  • Social security numbers

  • 2 months of recent bank and asset statements

  • 2 years of federal tax returns

  • 2 years W2’s

  • Recent paystubs (30 days to 2 months)

What else do you need to know?

Although getting pre-approved is a straightforward process, it can be very exhausting. Aside from making sure that you’re in good financial standing, you will need to prepare a lot of requirements to get through the entire process. This is why you need to hire a reliable real estate agent. A good realtor can make the process easier by guiding through every step.