4 Mortgage Pre-approval Requirements Buyers Should Prepare

Home-buying is always exciting because having your own house is often a significant part of the American dream. It can be thrilling to finally call a place your own and have the freedom to make it look and feel how you want it. However, purchasing a property is a huge investment that requires some ample preparation.

The home-buying process should begin in the mortgage lenders’ office because serious buyers typically already have pre-approval letters ready. Many sellers will negotiate more readily if the prospective home-buyer is already pre-approved and can gain proper financing before making an offer.

For home-buyers to get their pre-approval letters, they need to provide the necessary documentation that the mortgage lenders will ask for. Without further ado, here are some of the requirements buyers should prepare to get pre-approved for a mortgage loan:

4 Mortgage Pre-approval Requirements

1. Proof of Income and Employment. Verifying your income and employment is necessary for mortgage lenders to ensure that you can pay for the money you’ll borrow. The required documentation will vary depending on how you earn. Providing proof of income is easier for W-2 wage owners with an annual W-2 form. They typically only have paychecks from one source, so they only need to present their two most recent pay stubs. However, if the document has bonuses and differential pay, you’ll have to give the most recent end-of-year stub. Employment verification is also necessary for some lenders. Borrowers need to ensure that they have stable employment, so lending institutions may contact the buyer’s employer to verify the employment and salary. Self-employed or freelancing professionals need to present year-to-date profit and loss statements and two years of tax returns. They also need to prove the stability of their income, the nature and other details of their business, the demand for their products and services, and the ability to continually make mortgage payments.
2. Documentation on Assets. Aside from income and employment, lenders also have to look into bank and investment account statements and cash reserves to determine if the borrower can pay for the down payment and closing costs.
3. Credit Records. Numerous mortgage lenders require borrowers to have good credit, with a FICO score of 620 or higher, to approve them for a conventional loan. However, some lending institutions will work with borrowers with low or moderately low credit scores. These home-buyers often have to make larger down payments for their properties.
4. Other Necessary Documents. Lenders will often request other documents for verification and credit report purposes. They may ask for the borrower’s driver’s license, social security number, signature, and other forms they deem necessary. It’s best to provide them with any additional documentation they request to ensure a smooth transaction.

Contact Reputable Mortgage Lenders Today

Getting pre-approved before looking for a home allows you to have more negotiating power when dealing with sellers. Many of them expect serious buyers with pre-approval letters ready, so it’s best to get one as soon as you can.

If you’re looking for mortgage lenders near Chicago or throughout Illinois, Indiana, Florida, Michigan and Wisconsin, MidAmerica Bancorp, Inc. has you covered. We’ll provide you with smooth transactions and the best low-down payment loans we have to offer. Contact us at (708) 237-4050 today!