A mortgage preapproval is a written statement that indicates how much money you qualify to borrow from the lender when purchasing a home. To process your preapproval, the lending agent will need a variety of information so that he or she can calculate monthly house payment obligations for homes in your desired price range, add up your other revolving monthly expenses and determine how much you can afford to borrow. The mortgage agent may also request various documents to verify some of the information you provide.
Depending on the mortgage lender’s requirements, you may need to provide:
- Proof of income – Many lenders require you to provide your most recent earnings statements and/or W-2s to verify employment income.
- Proof of employment – If your ability to qualify for a loan depends on continued employment, your lender may ask for a document that verifies your employment status.
- Bank account statements – Your lender may ask to see the most recent statements from all of your bank accounts to verify your available funds and financial stability.
- Tax returns – Your lender may ask to see your tax returns from the last two years for a preapproval, especially if you are self-employed.
- Credit report – The mortgage agent will pull your credit report on his or her own. However, you will have to provide your social security number and your express permission for the credit check. Your credit report will be used to calculate revolving debts you will owe in addition to your house payment, as well as to evaluate your credit worthiness.
Keep in mind that you may also be required to provide information about the type of home you hope to purchase so that the lender can calculate monthly house payment obligations accurately.
Getting a Preapproval
In some cases, you may be able to obtain a preapproval without providing all of the documentation included above. However, because you will most likely be required to provide this documentation before the loan can be finalized, it’s a good idea to begin collecting it anyway. To learn more about obtaining a preapproval or the loan process in general, please contact Starboard Financial.