If you are going to buy a house then getting pre-approval letter for the mortgage can help you in a number of ways. It will not only let you get the best deal, but will provide many other benefits. Let us tell you about those benefits.
- Pre-approval will provide you the opportunity to discuss the various loan options with your lender.
- It will let you know about the possible problems that you can face for getting your mortgage approved.
- Your pre-approval will let you know the amount that you can borrow and thereby, have an idea of the monthly payments. It lets you choose the deal that you would be comfortable with.
- Home sellers are more likely to negotiate with the people who have pre-approval for the mortgage.
Thus, pre-approval is much important because it acts as a proof that that lender has verified your credit record and other documentation for a specific loan amount. Understanding this importance, we would like to tell you the most important things that you would need for being pre-approved for the mortgage.
- Income proof
Gone are the days when no documentation was required for loan. So, you are required to show your two years’ W-2 statements to the lender which will give him the proof of all your income. It will include you total income that you get from various sources.
- Proof for assets
Along with the income, you are required to provide the proof of your assets and investments. It will provide the proof that you are having enough funds for down payments. The percentage of the down payment depends on the loan program. In the case you are getting help from a relative or a friend you are required to show a gift letter for that.
- Good credit score
In the case you wish to get the loan on lowest interest rate, you are required to have good credit score. The borrowers who have a credit score less than 580 are required to make larger down payments. In the case you have low credit score; your lender will recommend you the way for improving it and thereby, becoming qualified for the mortgage.
- Employment verification
Only showing the income proof will not work; you will be required to provide the contact of your employer so that your lender can do the verification. In the case you are self-employed, you will be required to complete the additional paperwork for showing your income.