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?

Getting pre-approved means your lender thoroughly reviews your information. This review ensures they can approve your home purchase. They typically set a borrowing limit but guarantee approval as long as your financial situation remains unchanged.

Getting pre-approved benefits you as the buyer and does not apply to a specific home.

You will still need to provide additional documentation. Moreover, you must complete the home buying process to obtain official approval and clear to close. This can include greater detail about some financial information, such as your expenses and income. It also means getting more information about your house to make sure that it meets all of the requirements that your lender or mortgage program has set.

What do I need to get pre-approved?

Your lender will give you a specific list of documents and information that they need to review and process your pre-approval. These almost always include:

• Proof of income: This can be a W-2, tax return, or self-employment income sheet. The specifics will vary by situation. However, you must show that you have the income to support your home’s purchase.
• Employment verification: Along with showing your income, you must prove your employment and demonstrate that you will remain employed. Self-employed, provide detailed documentation and information about your work. This ensures lenders have complete records.
• 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. Reputable lenders require this step as part of the home buying process. Complete it early to avoid potential issues.