How to Qualify for Mortgage Pre Approval and What Information is Needed
It is extremely important to get preapproved before searching for a home, as the lender can verify that you are qualified and can afford certain loan amounts. Furthermore, having this confirmation helps you narrow down potential properties within your price range. To find the most competitive rates and terms, complete a mortgage preapproval application with multiple lenders at once.
Obtaining mortgage pre approval is more complex than getting prequalified, as the lender needs to verify your employment, income and assets. They’ll also assess your debt-to-income ratio (DTI) and credit worthiness, which will determine the size of your loan and what interest rate will be charged on it.
Proof of Employment
In order to be approved for a mortgage, you will need to show your lender proof of your employment. This can be in the form of pay stubs, W-2s and tax returns. It would also be beneficial if you had a list of all current employers with their names, phone numbers and mailing addresses.
Proof of Income
In addition to your most recent pay stubs, the lender will require a comprehensive list of all earnings over the past two years. This document should include both your average annual wage and number of hours worked.
Bank Account Information
Your lender will require to know if you have enough funds in your checking and savings accounts. They also want to see if any investment accounts or money market accounts exist for you. Moreover, they want to know about any outstanding loans you have and whether they are being paid off completely or monthly.
Your Credit History
In order to qualify for a mortgage, you must have a credit score of at least 620. Having a high credit score is more beneficial than having one low, as it increases your chances of approval and lowers the interest rate charged on the loan.
Your Credit Report and Score
In order to secure a mortgage, you will need copies of your credit reports from each major bureau (Equifax, Experian and TransUnion). This will enable the lender to assess how your financial situation has evolved since you last applied for a loan.
Your Loans and Expenses
It is necessary to give your lender a list of all loans you have, such as car loans, student loans, credit cards and any other personal debt. This will enable them to calculate your debt-to-income ratio and guarantee that you can afford making timely mortgage payments.