Ready to Buy? Let's Get Preapproved
- Amber Walsh
- Feb 3, 2021
- 2 min read
Buying a house is such an exciting time! There are many hopes, dreams, and expectations that go into a new home, but one thing that many new buyers don't understand is the pre-qualification and pre-approval process. Let's dive into those today!
A pre-qualification is a quick review of your income and employment, credit, and current assets. This gives a mortgage lender an idea of whether or not you would qualify for a mortgage. Think of this as an overview as it is not as strong as having a pre-approval.
A pre-approval is a much more in-depth look at your income, credit, and assets. You will have to provide a lot of supporting documentation such as:
Paystubs for the past 30 days
W2 for the past 2 years
Income Tax Returns for past 2 years
Government issued ID
In addition you may be asked to provide the following:
DD2 if you are applying for a VA loan
Award Letter for Retirement
Alimony or Child Support Court Order and proof of payments
Bankruptcy documentation
The address of a previous foreclosure or short sale
A copy of your IRS plan if you are on one
You will also want to remove any disputes on your credit report.
Why Get Pre-Approved?
Getting pre-approved gives you the knowledge of the maximum price range. It allows for leverage in sales negotiations, which is extremely important in today's market. It also allows for a contract to be written quickly and closing on your home faster!
How to Stay Pre-Approved
Did you know you can lose your pre-approval? It is true! Lenders will do a soft check on your credit report, usually ten (10) days prior to your closing on a home. This is to insure that you have not done anything to hurt your chances of the deal falling through. So, how do you stay pre-approved:
Make all your payments on time
Do not obtain new loans
Leave your down payment alone
Refrain from making any large deposits into your bank account other than your paycheck
Keep the same bank account - do not transfer banks!
Do not cosign a loan for anyone
Refrain from buying anything on credit
Know that you know more about the pre-approval process, please reach out to me if you need help finding a lender to get pre-approved. I look forward to working with you on your home purchase!
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