Pre-Approval

When a person decides that it is time to purchase a home, they may attempt to get pre-approval before shopping for the house of their dreams. Obtaining a pre-approval is beneficial for some homebuyers in several ways.

A pre-approval allows homebuyers to discuss loan options, be alerted to any issues with credit, and provides an idea of what type of home they can afford comfortably. While a pre-approval is not required for the purchase of a mortgage, many people decide to follow this process to estimate what kind of funding they can obtain. To obtain a pre-approval letter, a homebuyer must have several items.

• Proof of Income: A lender will want to see payment statements from the past two years at a minimum. They will also want to see proof of any additional monthly income such as alimony.
• Proof of Assets: Bank statements will need to be provided to show a lender that there are funds for the down payment and closing costs.
• Good Credit: While it is possible to obtain a mortgage with less than perfect credit, a good credit score is required. Those with credit scores in the 600s may find that they can obtain a mortgage loan but will pay more in interest.
• Verification of Employment: The lender a person is working with will want to verify their employment. This may be done with pay stubs and a phone call to the employer.
• Documentation: A homebuyer looking to secure pre-approval will need to provide identifying information, such as a driver's license and Social Security number.

Pre-approval can be a wise decision for anyone considering buying a new home. An experienced real estate agent can provide more information about the process.

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