How to Get a Mortgage Pre-approval

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Before meeting with a real estate agent to go house hunting, it’s a good idea to meet with a loan officer first to make sure you qualify for the type of mortgage you desire. Once you have an idea of what suits you best, learning the steps to getting a mortgage comes next. The best place to start preparing is to schedule an appointment to meet with a loan officer to prequalify for a mortgage. This is a big step in the process but if you come prepared, it can start smoothly so you can move to the next step (like shopping for that new home!).

Lenders need a lot of documentation to get you approved for a mortgage, so the more you bring up front, the less they will bug you later. Know what your loan officer needs, come prepared and you will sail smoothly to closing. Here is a guide of how to get a mortgage pre-approval so you can be ahead of the game when shopping for your new dream home.

Money Talk

Hopefully you have the finances to put a down payment on your home. Check your savings account: how much can you put towards a down payment? You don’t want to empty your saving completely because there will be more expenses to come. You’ll need to pay for the move, because even if you don’t hire movers, it will still cost you some extra gas money and truck rental fee.

Once you finally move in, you’ll come across a list of items you need from the hardware store for repairs, renovations and maintenance (shelving, nails, paint and supplies, etc.), to make it feel like home. These small costs quickly add up, so budget wisely for miscellaneous costs you didn’t anticipate.

How much are you comfortable spending?

Pick out the amount you’re comfortable financing, and the highest payment you feel good about adding to your budget, before you meet with the loan officer. If they say you’re approved for more than you were anticipating, don’t make a mistake of maxing out your budget if you don’t feel comfortable because it means you will have a higher mortgage payment as well as principle and interest amounts, mortgage insurance, homeowner’s insurance, and property taxes. Stick to your own budget so you don’t end up house poor.

Closing costs

In addition to your down payment, many new home owners forget about the closing costs that come with a mortgage. These costs, combined with those listed above, typically add a few thousand dollars to your mortgage.

Closing costs are all the fees associated with getting a mortgage from a lender, which include fees for the Title Company, appraisal, lender, underwriting company, and taxes. Prepaid fees are the prepaid property taxes and homeowner insurance. Remember that even if you set aside a large down payment, you may need several thousand dollars, still, to pay for your closing costs.

The Appointment

The loan officer is there to help you close your mortgage. They’re making money off of you. They want your loan to get approved for that very reason. They’re working for you, so find someone who appreciates your business and treats you well. Shop around if you feel like your bank has higher than average fees and rates. These fees are usually negotiable, so it’s in your best interest to shop around.

Once you make the appointment you need to prepare for the application process so bring the following items:

Paystubs: Your loan officer will need about 2 month’s worth of paystubs so they can document your income. They will check your income history, so bring in records of employment.

Bank statements: You’ll need to prove that you have money for your down payment and closing costs, you need several recent bank statements to show you have the funds.

Tax returns: Your last 2 years of tax returns are important if you’re self-employed, because it may be one of the single ways to prove your income.

Photo ID: You must prove who you are! A government issued photo ID such as driver’s license or passport are the easiest forms to bring.

If you bring in all of this documentation up front, your loan officer will have a much easier time to start the pre-approval process. They will pull your credit report and be able to issue you a pre-qualification letter, specifying the amount you are approved to borrow. When you show this document to your real estate agent, they will know they can show you homes immediately. Get ahead of the game!