Prerequisites for Loan Pre-approval: Things to Secure First

Shopping for a home without a pre-approval? Stop. While it’s fun to go around picking your dream home, going about it without a pre-approved mortgage can be disheartening in the end. According to Mortgage Ogden, you should secure a pre-approved loan before you go property hunting. By doing so, not only will you know your real budget, you’ll also have a better understanding of what type of home you need. For your complete guide, here’s a list of documents to prepare when undertaking the pre-approval process.

Income Statement

The primary requirement of borrowers is the W-2 statement, which contains your total income in the last year and your current personal net worth. At this stage, it can be quickly determined if you have the financial capacity to get the loan value you’re aiming for.

Official Asset List

Your bank or legal representative can prepare this for you. A proof of assets includes your bank statements, investment accounts overview, and reserves. Since most loans would require a down payment, your existing cumulative wealth should amount to the upfront cost and fees. But, if the value of your assets is insufficient, you can ask a family member or a friend to support you through monetary gifts.

Issued Credit Score

Naturally, customers who have credit scores of 740 and above will have the lowest mortgage rates. So, if your issued credit score is below that, it would be a great idea to raise it. The average acceptable score is 620-640 depending on the lending institution.

Employment Endorsement

Apart from providing your pay stubs (statements), lenders would typically ask for some form of endorsement from your employer. You may ask for an endorsement from the company, or you may arrange for the lender to contact your employer directly to speed up the process. Selecting your dream home with the guarantee of a pre-approved mortgage is better than simply window shopping blindly.