It’s true, the early bird does catch the worm. Taking that advice, if you’re thinking of buying a home, even if you’re 6 months out, it’s never too early to prepare. In this Denver market, houses are getting multiple offers. In this super competitive market, you want to make sure that your offer gets chosen. Many realtors are veering toward offers with preapprovals behind them. This is different from a prequalification. If you didn’t see our blog on that, you can read it to find out the difference between the two. https://www.co-mortgage.com/2018/05/15/preapproval-vs-prequalified/ This article will outline how to get preapproved in 5 easy steps.
We’re starting with good credit because if you have some work to do in that area, you may need a few months to get that in order. Generally speaking, the threshold for the lowest interest rate is for credit scores of 740 and above. That being said, if your credit is below 620, you’ll want to get it to 620 at least.
To get the PreApproval process going, you’re going to need to provide W-2 statements from the past 2 years. Additionally, you’ll need recent pay stubs that show year-to-date income. Also, if you have any other source of income such as alimony, child support, or bonuses, you’ll need documentation that proves such income.
The borrower will need to provide bank statements, as well as, investment account statements that prove they have the funds for closing costs, down payment, etc. Per FHA guidelines, you must have at least 3.5% of the price of the home as a down payment. Conventional loan programs vary on their down payment requirements. Further, if you are receiving the funds from someone else for the down payment, you must provide a gift letter that proves that the funds are not a loan.
In some cases, the lender may call the borrower’s employer to verify employment and to confirm salary. If you’ve recently changed jobs, the lender may call the previous employer. Contrastly, if you’re self-employed, you will likely need to provide more documentation outlining the business and its income.
The last thing that you will need to provide to get preapproved for your loan is a copy of your identification and social security number. You’ll also need to provide your signature, permitting the lender to pull your credit report.
There you have it! How to get preapproved in 5 easy steps for a mortgage loan. Once you find the home you want to buy, you’ll likely need to provide additional paperwork. The Michael Shotnik team will be in constant contact with you through the whole process. We aim to make this process as seamless as possible!