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 those that are regarded as rich at times make use of housing mortgages also. However, there some many things you have to think about to get approved. We discuss these things 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 ought to prove that they can repay whatever money 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.
To support your income-earning capability, you should also provide evidence of asset ownership. The assets will function as more evidence of your capacity 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.
Many lenders require that the borrowers must score 740 and above to get the lowest interest rates on the home mortgage plans. However, those that have a FICO of at least 620 will get the pre-approval. Those that have lower credit scores will need to negotiate with the lending institution. Luckily, there are mortgage firms which offer pre-approval to individuals that have poor credit ratings. In case you’ve got a poor credit score, you should repair it first by clearing any debts which are outstanding to other businesses like from credit cards, utilities and the internet.
The proof of your income does not satisfy the mortgage and credit companies. 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. Obviously, it ought to be duly signed by the company’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. You should also prepare your social security number since this will be used to get your credit report.