Whether you’re buying your first home or moving up, a mortgage pre-approval is a valuable tool to have in your negotiating arsenal. Because pre-approved home buyers have already had their income, debt and credit history investigating by a lender, home sellers see them as a safer bet – and treat their offers accordingly. Make a bid on a home with a pre-approval letter in hand and you may even score a lower purchase price or get the upper hand when asking for concessions.
Of course, obtaining a pre-approval can be a lengthy process. While the actual documents required will vary by lender, you’ll need the following at minimum:
At least one month of pay stubs
At least two years of W2s
At least two years of tax returns
At least two months of checking, savings and investment account statements
If you have other sources of income – such as alimony, child support or rental property payments – you’ll need to provide additional documentation. If you’ve recently divorced, your lender may ask you for a copy of the decree. A bankruptcy in your past may lead to the request for discharge documents. And if you’re self-employed, you can expect the documentation requirements to be more substantial.
Lenders may also scrutinize your down payment funds during the pre-approval process. They’ll want to see where this money – and your closing cost payments are coming from. Establishing a paper trail is important. This means depositing any money you receive – from paychecks to wedding gifts – as soon as you receive it. Notarized “gift letters” from family and friends – stating that the money contributed is not a loan and is not going to be paid back – may also be required.
As always, never hesitate to contacts us, to see where and how we can help you. We’ve got great referrals and would love to help you obtain your dreams, with ease.