The first step for a homebuyer looking to enter the real estate market as a financed buyer is preparing for and gathering the information they need to apply for pre-approval. During the pre-approval process, the buyer is evaluated on whether they qualify for the loan and the amount of the mortgage they qualify for. This should not be confused with a prequalification. Being pre-qualified shows the estimated amount that can be lent to you based on the information you provide, whereas a pre-approval verifies the information to decide how much they are actually willing to lend.
What You Need to Prepare for a Pre-Approval Meeting
This is a formal process that requires you to complete a mortgage application for which you pay a certain amount of money. Documents with your financial background are presented to the lender where your credit rating is evaluated. Through the data, the lender determines how much you qualify for and informs you of the interest rate associated with your mortgage. Though the mortgage checklist of information to bring with you may vary slightly from lender to lender, most of them will require the following:
• Proof of Employment or Income
You must have proof that you have a steady income for your mortgage to be approved. Individuals may be asked to provide pay stubs and/or bank statements during the meeting as proof of a stable income. Additionally, you’ll need to bring your most recent W2 with you.
Billing statements on credit cards and other loans are mandatory as lenders use this information to calculate the borrower’s debt-to-income ratio. Student and motor vehicle loans should be included.
Motor vehicle logbooks, investment records, and bank statements can be vital in determining your financial status. Should you have real estate properties, a council rate can be presented as evidence of ownership.
Once a pre-approval goes through, be sure to act quickly as most pre-approvals are only valid for a maximum of six months. If you’re ready to speak to a mortgage lender to evaluate your options, contact us today!