Documents Needed for a Mortgage Pre-Approval
Home shopping or home buying is the process of finding a home, and it is not an easy task. Apart from looking for the home which matches your lifestyle and preferences, there are many things you have to know since it is not possible for an average wage earner to pay cash for their dream house. Even people that are considered as rich occasionally make use of home mortgages too. However, to be approved, there a few numerous things you have to think about. We discuss these things in the guide below.
Gone are the days when home mortgage firms gave pre-approvals without submitting documents or without the buyer going through a thorough verification check. Nowadays, the buyer must show that they can repay whatever amount the lending company gives them. Some of the documents needed as proof of income are recent pay slips, W-2 statements, tax returns, bonuses and payments from clients in case you own a business.
To support your income-earning capability, you should also provide evidence of asset ownership. The assets will function as more evidence of your capacity to repay the loan. Usually, the institution or bank from where you are trying to obtain the pre-approval will need you to submit copies of your bank statements and investments. These documents will show that you have enough fund for the down payment, monthly dues, and closing costs. They are also proof that you have some cash reserve.
Most lenders require that the creditors should score 740 and Above to get the lowest interest rates on the house mortgage programs. Nonetheless, the individuals with a FICO of at least 620 will get the pre-approval. Those that have lower credit scores will need to negotiate with the lending institution. Luckily, there are mortgage firms which offer pre-approval to individuals that have poor credit ratings. In case you’ve got a poor credit score, you should repair it first by clearing any debts which are outstanding to other businesses like from credit cards, utilities and the internet.
The proof of your income is not sufficient for the credit and mortgage businesses. Hence, you also need to prepare certified or verified employment documents. The employment certificate or documents must have your full name, present address, the name of the business, your position, and salary level. The firm’s letterhead where you’re presently working is also an essential part of the employment certification that you’ve got to get. Of course, it should be duly signed by the representative of the company.
You should avail any other documents that the lender requests. Usually, these records comprise the copies of your identification cards and evidence of billing. It’s also wise to prepare your social security number because this will be utilized to fetch your credit report.