Buying a house? Getting pre-approved
is an important step for home buyers. The two main benefits of pre-approval are
that it allows buyers to shop in a known price range, thus saving time and
effort, and it gives them negotiating leverage because they will be perceived
as serious buyers. As important as pre-approval is, there still remains some
confusion about exactly what it entails and what documents are required. To
help dispel some of that confusion, we offer this detailed look at the
documents you need for pre-approval when buying a house.
Stages
of Mortgage Lending
But first, before we get into the
specific documents pre-approval requires, let’s look at the stages of the
mortgage process to gain a better understanding of why the documents are
required, as well as where and how pre-approval fits into the process of buying
a house. The typical stages, which often require many of the
same documents, are:
PRE-APPROVAL
In this first stage, the lender
reviews your financial situation to determine whether you can qualify for a
loan and to determine how much you can borrow.
UNDERWRITING
The underwriter reviews the loan
application and supporting documents to make sure you and the property in
question meet all pertinent requirements and guidelines.
CONDITIONAL
MORTGAGE APPROVAL
This is the penultimate step in
which the underwriter requests additional documents and information in order
the give the go-ahead for the “clear to close.”
CLOSING
In this final stage of buying a
house, the prepared and reviewed documents are finalized and signed, money
changes hands, and the transaction is finalized.
Documents
Needed for Pre-Approval
The most common documents needed for
pre-approval as a first step toward buying a house are:
PROOF
OF SOCIAL SECURITY NUMBER
A Social Security card (or other
acceptable proof) will have to be provided by all buyers on the mortgage loan
in order to verify identity. Alternative proofs can include tax documents and
other official documents that show borrowers’ SSN.
RECORD
OF EMPLOYMENT
Typically, a lender will ask for a
record of your past two years of employment, along with employer information.
PROOF
OF INCOME
And, of course, in order to get
pre-approved for buying a house in Floresville, you will have to prove that you
currently have income. Usually, your two most recent pay stubs (or copies of
the electronic equivalent) will do the trick.
TAX
DOCUMENTS
For pre-approval, your mortgage
lender will almost always want to see W-2s and tax returns for the past two
years.
RESIDENCY
INFORMATION
You will need to provide information
about and verification of where you’ve lived for the past two or so years.
BANKING
INFORMATION
Pre-approval for a mortgage for
buying a house in Floresville will also mean (obviously) providing information
about how much money you have in the bank. The main purpose of this is to prove
that you have sufficient funds to cover things like the down payment and
closing costs.
CREDIT/DEBT
INFORMATION
Lenders will also want to know about
any outstanding debt you have, for example, credit cards, auto loans, and
student loans.
MONTHLY
PAYMENTS
Some lenders will also want to know
about what and how much you have to pay each month. This would include monthly
expenses like credit card payments, rent, and student loan payments.
A couple of other special-case
documents you may have to provide when buying a house are: 1)
“gift letters” from family or friends who intend to provide financial help with
expenses like closing costs and 2) self-employment documents (if that applies)
such as profit-and-loss statements, balance sheets, and tax statements and/or
1099s.
The pre-approval documents listed
above are the most common documents lenders require. There may be others
depending on the lender, the type of loan, and the city or state. Both
pre-approval and buying a house can be intimidating and complex processes.
That’s why you should talk to your Floresville Real Estate Agent: to avoid
making any missteps or costly mistakes. Always ready to
help.
Send me a message or give us a call today at (210) 216-7722.
Country
Living with City Convenience
Floresville Real Estate Agent – Faye
Y Taylor
is here for help and to answer any questions you might have
Serving all of Wilson County and the
South Texas area
Floresville Real Estate Agent - You Tube channel