Documents to Prepare for a Mortgage Pre-Approval
Home shopping or home buying is the process of finding a home, and it is not an easy task. Apart from looking for the home which matches your lifestyle and preferences, there are many things you have to know since it is not possible for an average wage earner to pay cash for their dream house. Even the ones that are considered as wealthy occasionally use home mortgages too. However, to be approved, there a few numerous things you have to think about. We talk about these items in the article below.
Gone are the times when home mortgage companies gave pre-approvals without submitting records or without the purchaser going through a comprehensive verification test. Nowadays, the buyer must show that they can repay whatever amount the lending company gives them. Some of the documents needed as proof of income are recent pay slips, W-2 statements, tax returns, bonuses and payments from clients in case you own a business.
To support your income-earning capability, you should also provide evidence of asset ownership. The assets will serve as further evidence of your capacity to repay the loan. Usually, the institution or bank from where you are trying to obtain the pre-approval will need you to submit copies of your bank statements and investments. These documents will show that you have enough fund for the down payment, monthly dues, and closing costs. They’re also evidence that you’ve got some cash reserve.
Most lenders require that the creditors should score 740 and Above to get the lowest interest rates on the house mortgage programs. But, the ones which have a FICO of at least 620 will get the pre-approval. People that have lower credit scores will need to make a deal 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 is not enough for the mortgage and credit businesses. Hence, you also need to prepare certified or verified employment documents. The employment records or certificate has to have your full name, current address, the name of the firm, your position and salary grade. The company’s letterhead where you are currently employed is also a crucial part of the employment certificate which you have to get. Of course, it should be duly signed by the representative of the company.
You ought to provide any other files that the creditor requests. Usually, these records comprise the copies of your identification cards and evidence of billing. It’s also wise to prepare your social security number because this will be utilized to fetch your credit report.