Getting ready to make your first-time home purchase or ready to move up to your next one? For starters, you need the facts of how much a lender will allow you to borrow instead of making an assumption of what you think they’ll loan you. If you tell your Real Estate Agent “My budget is $500,000-600,000, let’s go look at houses!”….and after finding a house you love after hours and days of looking and driving, you finally apply for your loan to discover the bank will give you only $300,000!. Uh oh!
A pre-approval shows, and proves, to your real estate agent and the seller you are serious and are ready to perform. In almost every case, an offer that your real estate agent puts together for you first requires a pre-approval letter to be included, and sometimes proof-of-funds (aka ‘bank statement’) to show indeed you do have your cash deposit ready, ie. 3% to 20% or more…all of which is sent to the seller’s agent for consideration of your bid on the house you want to buy.
Items usually needed by your lender for a Pre-Approval:
- Last 2 Years of your tax returns (ALL the pages, the whole package), using most recent and the year prior.
- Pay Stub from the last 30 days of work. Direct deposit should have a receipt that can work.
(use 1120S form if Self-Employed)
- Last 2 Months of most recent bank statement(s)…provide ALL the pages, not just the summary.
- Social Security Award Letter, Pension Statements, Military Discharge, if applicable.
- Clear copies of your Driver’s License AND Social Security Card(s)
- A completed and signed loan application as provided by your Lender.
An official pre-approval from your lend helps avoid problems or rejection in escrow if your offer has been accepted by a seller. Problems in escrow, especially with your loan, creates a longer delay to the time you can move into your new home….or maybe never if your lender has problems with finalizing your loan during escrow! Everyone’s time would be wasted and YOU would be very disappointed. Get your pre-approval in place before you do anything!
Pre-approval completed, officially approved, and you have an official copy of the letter?
Now you can move forward with confidence! Call your real estate agent and go shopping!