Documents Required for a Mortgage Pre-Approval
Home shopping or home buying is the process of finding a home, and it is not an easy task. Aside from looking for the house which matches your tastes and lifestyle, there are many things you need to know because it is not feasible for an average wage earner to pay cash for their dream home. Even the ones that are considered as wealthy occasionally use home mortgages too. However, to be approved, there a few numerous things you have to think about. We discuss these things in the guide below.
Gone are the times when home mortgage companies gave pre-approvals without submitting records or without the purchaser going through a comprehensive verification test. Today, the buyer should prove that they can repay whatever amount the lender gives them. Some of the documents needed as proof of income are recent pay slips, W-2 statements, tax returns, bonuses and payments from clients in case you own a business.
To show your income-earning capacity, you need to also supply evidence of asset ownership. The assets will serve as more proof of your capability to repay the loan. Ordinarily, the bank or institution from where you’re trying to get the pre-approval will require you to submit copies of your investments and bank statements. These documents will show that you have enough fund for the down payment, monthly dues, and closing costs. They are also proof that you have some cash reserve.
Most lenders require that the creditors should score 740 and Above to get the lowest interest rates on the house mortgage programs. But, the ones which have a FICO of at least 620 will get the pre-approval. The ones that have lower credit ratings will have to make a deal with the lender. Luckily, there are mortgage firms which offer pre-approval to individuals that have poor credit ratings. If you have a low credit score, you should fix it first by repaying any outstanding debts to other companies like from your internet, utilities and credit card.
The proof of your income is not sufficient for the credit and mortgage businesses. Therefore, you also ought to get ready the certified or verified employment documents. The employment records or certificate has to have your full name, current address, the name of the firm, your position and salary grade. The company’s letterhead where you are currently employed is also a crucial part of the employment certificate which you have to get. Of course, it must be duly signed by the firm’s representative.
You have to give any other files that the lender requests. Ordinarily, these records include the copies of proof of billing and your identification cards. It’s also wise to prepare your social security number because this will be utilized to fetch your credit report.