Documents to Prepare for a Mortgage Pre-Approval
Home shopping or home buying is the process of finding a home, and it is not an easy task. Apart from looking for the home which matches your lifestyle and preferences, there are many things you have to know since it is not possible for an average wage earner to pay cash for their dream house. Even people that are considered as rich occasionally make use of home mortgages too. However, there some many things you have to think about to get approved. We talk about these items in the guide below.
Gone are the days when home mortgage firms gave pre-approvals without submitting documents or without the buyer going through a thorough verification check. Nowadays, the buyer must show that they can repay whatever amount the lending company gives them. Some of the documents required as proof of income are W-2 statements, tax returns, recent pay slips, payments and bonuses from customers in case you have a business.
You should also provide evidence of asset ownership to support your income-earning capacity. The assets will serve as further evidence of your capacity to repay the loan. Normally, the institution or bank from where you are seeking the pre-approval will need you to submit copies of your investments and bank statements. These documents will prove that you have sufficient funds for the down payment, closing costs and monthly dues. They also prove that you have some cash reserve.
Many lenders require that the borrowers must score 740 and above to get the lowest interest rates on the home mortgage plans. But, the ones which have a FICO of at least 620 will get the pre-approval. People that have lower credit scores will need to make a deal with the lending institution. Luckily, there are mortgage businesses which give pre-approval to individuals that have low credit ratings. When you have a poor credit rating, you should repair it first by repaying any outstanding debts to other businesses like from the web, uses and charge card.
The proof of your income is not sufficient for the credit and mortgage businesses. Thus, you also ought to prepare certified or verified employment documents. The employment certificate or documents must have your full name, present address, the name of the business, your position, and salary level. The business’ letterhead where you are currently working is also a vital part of the employment certification which you’ve got to get. Of course, it should be duly signed by the representative of the company.
You ought to provide any other files that the creditor requests. Normally these documents include the copies of your identification cards and proof of billing. It’s also prudent to prepare your social security number as this will be employed to find your credit report.