Getting Pre-Approved for a Home Loan

If you are starting your home search as a serious buyer, you want to consider getting pre-approved for a home loan. It requires a bit of work upfront but can streamline the process and make purchasing your home that much easier in the end.

What does it mean to be pre-approved?

Getting pre-approved means that your home loan consultant has reviewed your information in enough detail to approve your home purchase in writing. They typically put a cap to the limit that you can borrow but guarantee that you will be approved as long as nothing in your financial situation changes.

Getting pre-approved is for you as the buyer and not designated for a specific home. You may still need to provide additional documentation once your home offer is accepted as income and asset documentation is time sensitive, but getting pre-approved up-front for a home loan is a great first step.

What do I need to get pre-approved?

Your lender will give you a specific list of documents and information that they need to review and process your pre-approval. These almost always include:

• Proof of income: This can be a W-2, tax return, or self-employment income sheet. The specifics will vary by situation but you will need to show that you have the income to support your home’s purchase.
• Employment verification: Just like you have to show your income, you also need to show that you are employed and expect to remain so in the future. If you are self-employed, expect to provide more information and documentation about your work.
• Proof of identification: Your lender will need to make sure that you are who you say you are. This can be provided through a copy of your driver’s license or other photo ID. You will also need to provide your social security number to run your credit history.
• List of assets: Bank statements show your position going into the loan. Your lender wants to know that you have enough money to cover the down payment as well as adequate cash reserves.
• Credit check: To get a pre-approval letter, your lender will need to get your credit score. This is a required part of the home buying process for all reputable lenders and is best done early in the process to make sure that there aren’t any issues.