Mortgage guidelines have been tightened in recent years with documentation requirements being followed more closely. A pre-approval gets you started with the loan process and helps you determine your budget long before you get tied into a purchase contract.
Knowing your price point will determine the homes you view. You’ll know how much cash you need to close and you’ll know your monthly mortgage payment. Understanding your budget will help you negotiate with confidence.
If you change your mind there’s no obligation to use a particular loan program once you’ve been pre-approved. Ultimately you’re looking for the best deal and a loan officer that is competent and available who will help guide you through the process.
Your pre-approval is good for the “shelf life” of the documets used. These will include a credit report, pay stubs, bank statements, W2s, tax returns, etc. The usable life of these documents will vary, but it’s safe to say that your approval is good for up to three or four months.
Sellers like a sure thing so most listing agents require that all offers are submitted with a loan pre-approval. As properties are moving quickly in the current market, getting a pre-approval BEFORE house hunting gives you an advantage over those who have not yet taken that step.
- W2 forms from past two years
- Pay stubs for past 3 months
- Personal tax returns for past two years
- Business and personal tax returns for past two years
- Year-to-date profit and loss statements
- Year-to-date balance sheet
Names, balances, and account numbers for all of the following:
- Credit cards
- Car, student, or any other loans
- Store lines of credit
- Other consumer debt with recurring monthly payments
- Alimony payments
- Child support payments
- Divorce decree
- Documentation of down payment, such as checking and savings statements (all pages) showing account balances for three previous months
- Documents showing sources of any large deposits—if family is helping out
- Stocks, bonds, or other investment account statements for three previous months
- Retirement account statements, including 401(k) and IRA
- Names and phone numbers of landlords for two previous years
- Current mortgage documentation for two previous years