The Home Buying Process:
5 Things You Need For a Mortgage Pre-Approval
While it’s thrilling to start searching for homes immediately after deciding you’d like to buy one, the home buying process should actually start in a lenders office. With a pre-approval in hand Listing Agents are much more willing to work and negotiate with you. Two types of approvals exist in the pre-mortgage process, pre-qualification and pre-approval. Both provide benefits to the home buyer in the initial stages of the process, but only the pre-approval lets the seller and realtor know, you mean business. They can now be assured that you are a serious buyer and will qualify for the home you may decide to purchase. The pre-qualification on the other hand is simply an estimate on how much you can afford to spend on a new home.
So if you are ready to start the home buying process you should be prepared to offer up some information about your financial capabilities. Gather the following documents and identification for your first appointment with your chosen lender:
Proof of income: 2 years of pay stubs and 2 years of tax returns.
Proof of Assets: Bank statements and/or investment account statements to prove that you have the funds for the down payment. Which can be as low as 3.5 % for an FHA loan or in the case of conventional loans, which requires 10 to 20% depending on the program. Any money from a friend or relative must accompany a gift letter stating that the money is not a loan.
Good credit: Most lenders require a credit score of 620 or higher to approve an FHA loan. Those with a score below 580 are usually required to make a larger down payment.
Employment verification: The lender may want to call your current employer and if you have recently changed jobs they may also want to call your previous employer. It is important for them to see stable employment history. Be prepared with numbers, names and addresses of these individuals including dates of employment.
Documentation: Social security card, driver’s license and your signature will be required to have on hand so they can make a copy of them for your file and to pull your credit report.
Being prepared and visiting a lender before you begin the home search process can make the whole experience not only much smoother but much less stressful overall. Knowing what you can borrow upfront gives you the information you need in choosing the right home, and saves disappointment later on. Search homes for sale in Scottsdale, Fountain Hills, North Phoenix and North Scottsdale now!
If you would like more information about the home buying process or the pre-approval process, contact Steve Valkenaar with The Valkenaar Group today!