With Pre-Approvals, the buyer applies for the mortgage and receives a commitment from the lender prior to finding the property. Assuming the property of interest is within or less than the amount you are pre-approved for, the seller quickly knows that you are a serious buyer for the property. Knowing how much you can afford is the first step, sellers are much more responsive when dealing with potential buyers who have already been pre-approved. This will also allow you to avoid disappointment by focusing the search around properties within your price range rather than branching out. Typically, the costs for mortgage pre-approvals are minimal and the lender will usually allow you to pay them when closing the loan.
When applying for a mortgage pre-approval consider the following:
- Check your credit score and obtain a credit summary report. Doing this allows you to know if lenders see you as credit-worthy and approve you for a mortgage.
- Do your homework and contact various lenders to ensure you can obtain the best interest rate and terms.
Once you find the most suitable lender, they may request the following documents:
- Documents of identifications
- Employment letter and proof of income
- Verification letter from employer
- Pay stubs or income tax assessments
- Valuable assets owned
- Properties that may be owned
- Financial statements from your bank accounts
- Any long term debts (mortgages, credit cards loans, car payments, personal loans, child support/spousal support payments, and etc.)