What Do I Need for a Mortgage Pre-Approval?
What Documents Are Needed for a Mortgage Pre-Approval?
A lot of people often ask us, “When it comes to a home loan, what documents are required?” That simple question has both a simple and a complicated answer!
The simple answer: There are up to 6 documents we need for almost all loans. These are the documents you will need for your pre-approval, which should be your very first step when you decide you are ready to buy a house! Keep reading in the next section for the checklist of 6 documents you need when applying for a home loan!
The complicated answer: It depends! While the same core documents are typically needed, as we get into the home buying process after you have an accepted offer, we may find we need additional documents.
Needing additional documents, especially during the underwriting process, is not at all uncommon. Just like each borrower is different, each loan is different. When you combine the two, sometimes unique situations come up that require additional documents.
So while your friend may have needed to provide a Letter of Explanation about something, that doesn’t necessarily mean you will, too!
Mortgage Pre-Approval Checklist
Like we said above, getting pre-approved is the very first step you should take when you start house hunting. It’s the most important step in the process - once you’re pre-approved you’ll know exactly what your budget is!
The first step for getting pre-approved is reaching out to a loan officer. It’s important you like your loan officer and can see yourself enjoying working with them! After that, the loan officer will ask you for some initial documents they can review to finalize your pre-approval.
6 Documents You Need When Applying for a Home Loan:
1. Pay Stubs
We will need your most recent pay stubs from the past month. No matter how frequently you get paid, we need a one month history.
2. Tax Returns
You will need to provide the two most recent years of federal tax returns and forms. If you’re self-employed, this will include your business tax returns as well.
3. W-2s
We will need your two most recent years of W-2s.
4. Identification
This can be in the form of a state issued ID or driver’s license.
5. Bank Statements
We will need your two most recent months of bank statements. These also need to show your full name and complete account number. Please make sure to provide all pages of your bank statements…even if page 5 of 5 is blank!
6. Pension and Retirement Statements
We will want your most recent quarterly or monthly statement for all retirement accounts.
Why Should I Get Pre-Approved Before House Hunting?
It’s important to make sure you go through the pre-approval process, or at the very least talk to a mortgage loan officer who can give you a better understanding of your financial landscape and how that translates into obtaining a mortgage to buy a home.
The last thing that we would want is for a client to fall in love with a home that they don’t qualify for, or not know what their mortgage payment would be for that particular property.
Plus, the benefits of having a pre-approval before you start looking for a house are pretty significant!
Benefits of a Pre-Approval include:
You’re a more powerful buyer!
Real estate agents and sellers will see you as a more serious buyer with a pre-approval letter. You also could have better negotiating power because sellers know that you’ve already spoken to a lender.
You save time!
Knowing exactly how much house you can afford will help ensure you’re not wasting your time by looking at houses out of your budget. Not only that, but in today’s housing market offers are made quickly - already having that pre-approval letter will help keep you in the fast lane.
More confidence!
Purchasing a home isn’t just about knowing what your mortgage payment will be. It is about having a plan based on your specific life, and your specific needs. If you get pre-approved by the right person, then the entire loan process should be customized based on YOU. That way, you will understand why you chose the loan program you did, the down payment, the rate and fees, etc. This makes for a much more enjoyable home-buying experience.
We hope this article helps you feel empowered to take the next step toward home ownership. If you’re not sure if you’re quite ready to get pre-approved, it never hurts to talk to a Mortgage Loan Officer, or check to see if Epic Mortgage is in your state.
