While many mortgage lenders still quote fast 10-minute pre-qualification over the telephone or online, a true mortgage approval with some weight is one given by an underwriter who has had an opportunity to review all the documentation needed.
With a constant stream of new lending guidelines, volatile mortgage rates, and tightening Washington regulations, very few real estate agents will show the First Time buyer new homes without at least a letter of pre-qualification.
A Pre-Approval Letter will help you in three ways:
- It lets you know how much mortgage you can qualify for
- It gives you an estimate of what your total housing payment would be
- Submitting a strong “Pre-Approval” letter with a purchase offer will give the seller more confidence about your ability to complete your end of the agreement
Obviously, getting the documents approved beforehand is a smart idea, so that the pre-approval process is as comprehensive as possible. To get a letter of pre-approval, you will begin by filling out a loan application and submitting a couple of documents for review by the loan officer and/or underwriter.
Common Loan Pre-Approval Documents you will need:
Assets for Wage Earner:
- Last 2 year W2s and Tax Returns
- 2 most recent Pay Stubs
- 2 most recent Bank Statements, 401(K), Liquid Assets, Investment Accounts
Assets and income for Self-Employed:
- Last 2-year Tax Returns – Business and Personal
- Last Quarter P&L Statement
Letter of Explanation For:
- Employment Gap or New Line of Work
- Late Payments / Judgments / Bankruptcy on Credit Report
- Bankruptcy Discharge
- Child Support Documentation
- Lease Agreements (If own other Rental Properties)
- Mortgage Payment Coupons (If own other Real Estate)
How to Get Pre-Approved for a Mortgage
Also, most borrowers want a chance to learn more about the loan officer before digging all these personal documents up. Spend 15 minutes on the phone asking the loan officer to explain how mortgage rates operate, interviewing them about some common terms in the industry, or just seeing if they know what to tell the agent in advance. As long as you are prepared to ask the right questions, the Q&A session can be more than just a lender qualifying you.
After all, you’ll definitely want the above list of approval documents ready once you’ve decided on the right loan officer you ‘re confident will meet your expectations.