Shopping for a new home can require that you already have a plan in place for how you will go about paying for it. This includes having your potential sources of financing all lined up such as getting pre-approved for a mortgage.
It is important to note that there is a big difference between pre-approval for a loan and pre-qualification. For example, with loan pre-qualification, a lender will rely on information that you provide to them in order to come up with an estimate on how much you may be able to qualify for.
But with a loan pre-approval, a lender will actually go through the process of verifying your information in order to determine exactly how much they would be willing to lend you for the purchase of a home.
The documents that most all lenders will require in order to provide you with a mortgage pre-approval include:
- Recent pay stubs
- Your last two federal income tax returns
- Your last two years’ W-2 forms
- Your credit report
- Your last two month’s bank statements, as well as statements from other financial accounts that you have (such as investments at a brokerage firm)
While getting a loan pre-qualification is still not an actual loan commitment, it can help to make the mortgage underwriting process go more quickly, and it can put you in a much more competitive position in terms of submitting an offer on a home that you are interested. In some cases, when more than one offer for a property is submitted, the seller is more apt to go with a buyer who has been pre-approved than one who hasn’t been.
Over the past several years, getting mortgage pre-approval has become even more important for home buyers. Gone are the days when lenders will give you the green light by virtue of providing them with no documentation. If you’re considering the purchase of a new home, give us a call. We will help to walk you through the process so that you’ll be confident and ready to move forward.