What You Need for Mortgage Pre-Approval from Your Local Mortgage Lender
No matter what mortgage rates are doing – whether they’re going up or down, buying a home is an excellent investment. And preparing for the home loan process is an intelligent thing to do. Read on to see what you need for a mortgage pre-approval.
Going through the pre-approval process allows you as a buyer to prepare. Plus, getting a pre-approval gives you a better idea of how much home you can afford. That will set you up for a home buying experience that moves along more efficiently and is free of headaches!
Whether you’re a first-time homebuyer or looking to expand, we’ve created our ultimate mortgage pre-approval checklist to serve as a general guide. Review the items below that you’ll need for your pre-approval. Plus, we include some common pitfalls to avoid.
Grab a pen and some paper, and let’s get started!
Proof of Identification
A copy of your driver’s license
Driver’s licenses serve as an essential document for buyer verification and fraud prevention. Anyone who intends to have their name on the mortgage loan will need to supply their driver’s license or other valid forms of photo ID.
Down Payment Funds
Most recent bank statements
This one may not come as a surprise. Still, your mortgage lender will request that any buyer intending to put their name on the loan provide them with their most recent bank statements – this should include a comprehensive summary of all accounts open under their name. From there, the mortgage lender will examine the debits and credits thoroughly.
It’s imperative that you provide them with all the details requested and do not attempt to hide anything, even if it seems insignificant. Any withholding or falsification of financial information is considered mortgage fraud, and it can get you into significant legal trouble. All information will be calculated in your DTI ratio one way or another, so it’s best to be transparent with your lender from the start.
Retirement/Investment account statements
If you contribute to a retirement fund or an investment account, you’ll want to provide one or two monthly statements. Regardless of whether or not you intend to use these funds to purchase your home, the underwriter will need to see that you have a certain amount of money in reserves. These funds may help prove that you are a qualified borrower who can pay off your debt to the lender.
Proof of Income & Taxes
Pay stubs
This one is pretty straightforward. If you intend to have your name on the loan, bring the past 30 to 60 days’ worth of pay stubs as proof of your income.
Tax returns (form 1040)
Speaking of taxes, you’ll want to provide your tax returns from the previous two years to show your mortgage lender further proof of your income, employer, and address and verify your social security number and more essential details.
Tip: Do your best to retrieve PDF versions of your 1040 forms to save yourself the hassle of scanning everything page by page.
W-2 forms for the past two years (or form 1099)
Your W-2 states how much money your employer paid you over the past year and the taxes withheld. Lenders are looking at your last two years of income as part of your DTI calculation.
If you’re an independent contractor, you will need to provide the last two years’ W-2s or 1099s. That leads us to our next point.
Profit and loss statements
Lastly, for those who are self-employed or own your own business, you’ll need to provide your lender with two years’ worth of profit and loss statements. The lender may also request additional items, such as the business’ bank statements, so it’s best to come prepared with those.
Property tax bill
Your property taxes are another component of your DTI ratio, so all current homeowners will need to provide a copy of their bill from the most recent year.
Get Started on Your Mortgage Pre-Approval Today
With this checklist, you’ll be able to shop for a home loan that works best for you, move forward in your home buying journey with ease, and focus on finding your future home!
With Homestead Financial Mortgage’s online pre-approval form, take the first step towards mortgage pre-approval. Once you’ve submitted your form, a loan officer will review your application and contact you within 24 hours. The best part? Finding out your approval status through the online form is free!
As the region’s premier local mortgage lender, we’re experts in home loans and mortgages. We employ the best mortgage lenders to help guide you through your journey to homeownership. Contact us today to learn more about the home loan products we offer that are right for you.