Before the house hunt should come the pre-approval. It’s an important first step that will give you a defined price range to better guide your search. It shows real estate agents and sellers that you’re serious and able to buy, and it puts you in a good position come negotiation time. Plus, a pre-approval can help clarify details about your mortgage as you move into the loan process. Here’s what you’ll need if you’re ready to get that mortgage pre-approval.
Your mortgage pre-approval begins with an initial loan file. A loan officer, like those here at the Cushing Team, will start your file with two documents – the mortgage application and your credit report. Then you’ll need to submit the following pre-approval documents.
- Identification – The borrower will need to supply a state-issued photo ID, like a driver’s license. A passport will also work.
- Tax returns – You’ll need to provide two years of tax returns and W-2 forms if you work for a company. For those who are self-employed, you’ll typically be asked to supply a profit and loss (P&L) statement and federal tax returns for the previous two years. You may also need to provide a business license and/or a letter from your accountant.
- Pay stubs – If you have pay stubs, you’ll need the most recent 30 days. If you’re self-employed, again, you’ll likely be asked for a P&L statement.
- Bank statements – The borrower will also be asked to submit two months of the most recent bank statements. Make sure your copies show account numbers and are complete. Include checking, savings, brokerage, 401k, IRA, Roth, and 403b accounts.
Mortgage loans, like borrowers, are all different and unique. In some cases, and depending on your circumstances, you may be asked for additional documentation. These might include pension, social security, disability, homeowner’s association, or divorce statements, bankruptcy discharge documents, or current mortgage statements if you own other properties.
The Loan Estimate & Pre-Approval Letter
Your turn! Once your loan officer has all the required documentation, he or she will prepare your loan estimate. It’s also known as a Good Faith Estimate, and it’s an itemization of the estimated costs of both making the loan and ongoing costs. The underwriter will then assemble and review everything – your application, credit report, and documents – and make a yes-or-no decision. If you get the green light, your loan officer will create your pre-approval letter, which includes details like the maximum loan amount, the type of home loan, and any mandatory conditions. Remember, the letter isn’t a guarantee of a loan, but it’s an important first step.
In Reno, contact the Cushing Team, and let’s work together to get that mortgage pre-approval started.