Step 4: Getting Pre-approved For a Home Mortgage.

Pre-qualification occurs when you approach a lender and provide them with a picture of your finances, and the lender gives you an idea of what you can borrow however totaly based on waht you have told them. Pre-approval goes one big step further, the lender takes a complete loan application, independently verifies the information you have provided, and approves the loan, up to an amount, before you have found a home to buy. Pre-approval will definitely tell you the amount and type of mortgage you can qualify for. Pre-approval is the way to go. Why?

• You will be in better negotiating position, because the sellers know that you are financially capable of buying his property (barring any unforeseen circumstances).
• Closing time will be greatly reduced, since most of the required paperwork will already be completed.
• You may be able to lock a better interest rate.
• You will not discover, after finding your dream home, that you are unable to obtain the necessary mortgage.

A letter of pre-approval is only good for two months. After two months a new letter must be issued by your loan officer. This will cover any financial changes that may occur during the two month period.

Before you can get pre approved you will need to provide information and documentation to your loan officer. The information and documentation is then verified. If you meet the requirements set by the lending institution then a pre-approval letter will be issued. The following list will give you a basic idea of what may be needed to help you prepare:

• Addresses of residences for past two years
• Bank names, addresses, and account numbers for all checking/savings accounts (statements for the previous three months may be required)
• Copy of gift letter, if receiving down-payment money as a gift
• Copy of tax returns for two years (typically for self-employed only)
• Current balance sheet and year-to-date profit and loss statement (for self-employed only)
• Divorce decree (if applicable)
• Documentation of other income (alimony, child support, etc.)
• IRS Form 4506 or Form 8821 (these allow the IRS to release confidential tax information to the lender; these forms are not required in every instance)
• Job history (employers/addresses/phone numbers) for previous two years
• Letter of explanation (with documentation) for credit delinquency
• List of all assets, including make, model, year, and current value of automobiles owned
• Most recent statement(s) for 401(k), mutual funds, and money market accounts
• Names, addresses, account numbers, and balances of debts
• Original Certificate of Eligibility and DD 214 (for VA loan only)
• Pay stubs for the last thirty days
• Previous bankruptcy discharge papers (if applicable)
• Proof of bonuses for two years (if applicable)
• Proof of identity (driver's license/social security card)
• Proof of residency, such as green card/work or visa permit (for non-U.S. citizens only)
• Transcript (if you were a student within the past two years)
• W-2s for the past two years

 Go To Step 5