Ready to buy a home? Preapproval is the first thing you'll need to get in order, but even before that, there are some things you need to know! Take a look at our mortgage preapproval guide and make sure you follow this set of steps to ensure that you are as prepared as you need to be before you start looking at homes!
1. Review your credit report.
2. If there are any issues on your credit report that do not look correct, dispute them right away!
3. Locate your last two years of tax returns and proof of income (W2s or pay stubs), or if you are self-employed, you will need to provide your year to date profit and loss statement. You'll need to repeat this step for anyone else who will be on the mortgage loan, as well.
4. Prepare to have your down payment funds and any closing costs you will be responsible for ready in the bank, and plan to keep it safe from being spent during the transaction!
5. If you are receiving any funds from relatives or as a gift, you will need to be prepared to provide an explanation letter to your mortgage company.
6. If you are a first time homebuyer and have been renting, ask your landlord for a referral letter and gather your recent rent payment receipts to show you have paid on time.
7. You will need to gather some other documents, such as divorce papers, personal identification documents, etc.
8. Income documentation will need to be provided, including all forms (Social Security, alimony, any government assistance, child support, etc.). In addition, any and all retirement accounts or IRAs will need to have proof provided, as well as any stock markets investments or money market accounts.
9. Be prepared to explain any past financial situations such as bankruptcy. You will be requested to provide a written explanation of the situation.
10. No matter what you do, do NOT:
- Apply for new credit, even if it's a small clothing store credit card!
- Make large purchases.
- Close any credit cards.
When you are preapproved initially, your mortgage lender is approving you based on your credit scores at the time. If you have any changes to your credit score, it can impact your ability to purchase your dream home.
Once you have completed all of these steps, congratulations on receiving your preapproval! It is very smart to shop around and discover who will offer the best rates!
Need to talk with a lender you can trust? Message us, we have a short list of some really amazing lenders and loan officers!