Pre-approval – Why it’s Important!

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Now more than ever, we are stuck in our homes due to covid restrictions. Spaces are starting to feel small and searching for homes on Zillow is a daily favorite. You’re not alone if you are starting to realize you need new living quarters to keep this “work from home” gig going. Purchasing a home is a big decision anytime and your investment has many deciding factors when it comes time to buy. To ensure your dream home doesn’t get away, we always recommend being pre-approved before actively starting your search.

To some of us, buying a home is a brand new process and terms like pre-approval is new to your vocabulary. So what is pre-approval and why is it so important? Let’s say you’re ready to buy- it’s always best practice to start with finding a realtor. Real estate agents often recommend certain mortgage lenders to help buyers get what they need and to close on time. Now more than ever, pre-approval is needed to stand a chance in this seller’s market. This letter gives sellers peace of mind to know they won’t be wasting their time with someone who couldn’t afford their house in the first place.

What do you need to get a mortgage pre-approval?

Don’t let this part scare you off. Yes, the process is quite rigorous and you’ll need a number of documents but being prepare before you even apply will put you at ease. When in doubt, ask your realtor or mortgage lender for help. If you’re not to happy with your first approval amount- shop around.

Income/Identification/Assets

W-2 forms from the last two years.
Pay stubs from the last 30 days.
Proof of any additional income.
Last two years of federal income tax returns.
Last two years of business income tax returns.
Driver’s license or U.S. passport.
Social Security number.
Green card if this applies to you.
Credit history
Employment verification
Bank statements to prove that you have enough to cover the down payment and closing costs.
Last quarterly statements for asset accounts. Including 401(k), IRA, stock accounts and mutual funds.
Divorce decrees, if you pay or receive spousal or child support.

The mortgage application process is lengthy, even for the experienced home buyers. If you’re a first-time home buyer, sitting down with your realtor can put you in the right direction and can give you an understanding of the process, how long it takes, and what documentation is needed. With interest rates at a record low, many housing markets are shifting and preparedness is more important than ever.

For more real estate advice, CALL US HERE or email us at andrew@arehp.com

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