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What Do You Need For Home Loan Pre Approval

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Documents Needed For Mortgage Pre

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To begin the loan pre-approval process, youll want to have several documents ready for the lender.

Its important to remember that the documents one lender requires may be different from those of another. Regardless, these are the most common documents requested when seeking mortgage pre-approval and should help you get started.

Personal Information

Age, marital status, number of kids and their age. Two pieces of government issued identification is a must.

Expect to provide information on where youve lived over the past few years as well. That includes the details if youre renting or living with parents and have dependents .

Social Insurance Number

Verified through your SIN card, tax documents, or other official documents that show your SIN. The lender uses this to confirm your identify and acquire your credit report / score.

Employment Information

A list of your current and previous employers dating back two years or more. That includes their name, address and contact information. A lender wants to verify your employment.

If youre self-employed, a statement of your finances from an accountant can be a good start. The lender may ask for more documentation such as tax statements to prove your self-employment and financials.

Bank Information

Have bank statements for each of your accounts prepared. Lenders want to make sure you have enough funds in your account to take care of extra costs associated with buying a home. Two examples are the down payment and closing costs.

Mortgage Preapproval Vs Prequalification: What’s The Difference

When you’re shopping for mortgages, you’ll likely encounter a process called mortgage prequalification, which should not be confused with mortgage preapproval. Mortgage prequalification generates an estimate of how much money you may be eligible to borrowbut no details on interest rates, fees and the likeafter you answer a few quick questions online or over the phone about your income, assets and debts.

Mortgage preapproval is a much more formal process that requires you to complete a detailed mortgage application form , submit supporting documentation to back up your financial claims, and undergo a thorough examination of your credit reports and scores. Because applying for mortgage preapproval is essentially the same as applying for a mortgage loan, you may also have to pay an application fee.

Some real estate agents might like to see a mortgage prequalification before agreeing to work with you. But because a prequalification may not include any examination of your credit history or other documentation proving your finances, it won’t carry nearly as much weight with sellers as a mortgage preapproval.

What Do You Need To Get Pre

To get pre-approved, you’ll need to provide the lender with supporting financial documents. This differs from the pre-qualification process in that the lender will take a much closer look into your financial profile before offering you a mortgage loan.

Here’s a snapshot of what you need to get pre-approved versus pre-qualified:

Different Information Required for Pre-qualification vs Pre-Approval

Pre-qualification Requirements

Financial documentation required, like bank account statements or most recent W-2

Down payment amount

Down payment amount

The above snapshot isn’t one-size-fits-all. Lenders may differ in what documents they require and what tools they use in the pre-approval process.

For example, some lenders may require a paper application and actual signatures, while others may offer a more streamlined approach with an online application and e-signatures.

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Documents Youll Need If Youre Self

If youre self-employed or own a business, youll also be required to provide your tax returns and business returns for the past 1 3 years, depending on your lenders requirements.

Youll also need to show your year-to-date audited Profit and Loss statement. If you cant obtain that statement, youll need to provide a year-to-date unaudited Profit and Loss statement, along with your most recent 60 days of business bank statements.

What Can I Do With A Mortgage Pre

What Documents Do You Need for a Mortgage Pre

If your lender pre-approves you, they will send you a letter that conditionally accepts you for a specified mortgage amount. You can then use your pre-approval to look at homes within that price range .

When putting down an offer for a house, you can provide your mortgage pre-approval to the sellers agent. This strengthens your application, as it shows the seller youre likely able to secure financing.

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Gather Your Financial Documents

Getting pre-approved requires you to submit a lot of documents for a home loan application. That’s because lenders do a thorough review of your finances before they grant you a loan. You should be prepared to provide proof of income such as tax returns and pay stubs.

Many lenders also want you to provide bank statements or other proof you’ll be able to come up with a down payment. They’ll also pull your credit report to see your and the amount of debt you already have.

It can take time to get all these financial documents ready, so get started as you shop around for lenders.

When Should You Get Preapproved For A Mortgage

Prospective homebuyers know the importance of “location, location, location,” but timing can be critical too. Securing mortgage preapproval at the right moment in your house-hunting journey can help seal the deal, preserve your credit and spare you unnecessary expenses. Here’s the lowdown on when to seek preapproval.

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Documents Required To Get A Mortgage Pre

While the process of getting pre-approved might seem like an intimidating task it is actually not that hard, as long as you have all the right documentation and information. In Canada, the bank requires this information from you.

  • Identification in the form of a photo I.D.
  • Name, address, telephone number of your solicitor/notary
  • Proof of employment, salary and the amount of time youve been employed
  • Bank account information and any information on other investments you might have
  • Confirmation of your down payment
  • Information on your assets: vehicles, investments, other property that you might own
  • Information on all of you liabilities: credit card balances, lines of credit, car loans, student loans

How To Prequalify For A Mortgage

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You have decided to buy a house, but don’t have enough money to make the purchase. Your situation isn’t unique, few people have enough cash on hand to buy a home. However, banks and mortgage companies offer loans, called mortgages, which provide people with the difference between what they have saved and the price of the home they wish to purchase.

While many people find the home they want and then look for a mortgage, it’s a good idea to look at your mortgage options first. It’s important to know how much you’ll be able to borrow before you find a house.

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Best For Refinancing: Us Bank

Application score: 3/4

Customer satisfaction: 99.99%

Loan types offered: Conventional fixed 30-year, 20-year, 15-year, 10-year ARM 5/1, 10/1 FHA fixed 30-year, 15-year VA fixed 30-year, 15-year Jumbo fixed 30-year, 20-year, 15-year Construction

Minimum down payment: 5.0%

  • Apply online, by phone, or in person

  • Upload documents securely through the U.S. Bank Loan Portal

  • Low fees: Advertised APR and interest rate are similar

  • Well-organized and informative website

  • Closing cost credit with U.S. Bank Gold or Platinum checking package

  • No 3% down conventional loans

  • Gold or Platinum checking package must be open before loan approval to get closing credit

  • Gold or Platinum checking package may have monthly fee

  • No online preapproval only offers online prequalification

U.S. Bank is the ninth largest lender by volume in our survey, and about half of the loans it closed in 2019 were refis. Of all the lenders in our survey we identified as doing a large volume of refis, U.S. Bank scored the highest.

You can get a closing cost credit up to $1,000, with a new or existing U.S. Bank Gold or Platinum Personal Checking Package. Both plans come with a monthly fee, but there are options to get the fee waived.

U.S. Bank doesn’t appear to offer 3% down conventional loans, unlike many other lenders. Offers online prequalification, but not preapproval. This is less of an issue when refinancing than when purchasing, however.

Two Smart Homebuying Moves: Mortgage Prequalification And Preapproval

Find out how much house you can borrow before you start looking and how you can make the strongest offer possible on the property you choose.

If youre ready to make your dream of owning a home a reality, youve probably already heard that you should consider getting prequalified or preapproved for a mortgage. Its time to understand exactly what each of those terms means and how they might help you. And when youre working toward a goal this big, you want every advantage.

Ready to prequalify or apply? Get started

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Getting Prequalified Is A Simple Way To Ease Into The Process

If youre curious how much you may qualify to borrow, getting prequalified can be a valuable step in the home-buying process. Its quick and easy to do, and depending on the type of prequalification, may not affect your credit report. Youll need to provide some basic financial information, such as debt, income and assets. With this knowledge youll be able to answer: How much house can I afford? Or crunch your own numbers to estimate your monthly payment, affordability and more.

Lets get you closer to your new home.

Prequalification helps you see how much you might be able to borrow.

Determine Your Down Payment

Buying a Home? You

It helps to know how much you can provide as down payment before you start looking for a home. The size of your down payment may have an impact on the amount you get pre-approved for. Plus, down payments of less than 20% of the purchase price of a home require mortgage default insurance, whereas down payments that are 20% or above may not.

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Employment And Income History

When you apply for a mortgage, lenders go to great lengths to ensure that you earn a solid income and have stable employment. Thats why lenders request two years worth of W-2 tax forms and contact information for your employer. Essentially, lenders want to ensure that you can handle the added financial burden of a new mortgage.

Youll also be asked to provide salary information, so a lender has evidence that you earn enough money to afford a mortgage payment and related monthly housing expenses. Youll also have to provide 60 days of bank statements to show that you have enough cash in hand for a down payment and closing costs.

Does Getting Pre

A pre-approval letter doesnt bind you to any lender. That being said, if you do decide to take out a mortgage through another lender, youll have to repeat the paper work. But if you take out a mortgage through the lender who issued you a mortgage pre-approval, theyll have your paperwork on file, which will save you time when youre closing on a house.

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What Is A Pre

Mortgage pre-approval is assurance from a lender to provide you with financing to buy a home up to a certain loan amount.

Its a letter from your lender, written on the lenders letterhead, stating that you are approved for a loan of a specific dollar amount, says Denise Shur, a Realtor® with 1:1 Realty in San Jose, CA.

To get approved, your lender will collect a stack of paperwork from you that will include pay stubs, federal tax returns, W2s, investment accounts, and residential history. Once your complete financial portfolio is analyzed, the lender will decide whether or not to issue you a pre-approval letter.

Stay In Touch With Your Broker

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Stay reachable, in case your mortgage broker has any questions about your documentation. This means avoiding vacations or business trips where you wonât have access to email or phone. If you arenât available, they may make assumptions about your intent, and reject your mortgage pre-approval. If you absolutely must leave town, make sure to inform your mortgage broker in advance.

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What Documents Are Needed For A Mortgage Preapproval

  • Pay stubs from at least the past 30 days Your current income is a major consideration in getting preapproved for a loan, so your lender wants to see that you have a reliable, predictable cash flow coming in.
  • Federal income tax returns from the last two years These will help verify your employment history and show the lender a longer-term track record of your income.
  • Bank statements from at least the past two months Lenders like to make sure all your money is accounted for, so they want to check your bank statements to see that there arent any major unexplained deposits or withdrawals that could affect your loan.
  • Investment account statements Returns on your investments can count as income, and lenders need to know about all your sources of money, not just your day job.
  • Documentation related to any gift funds youre receiving If a family member or friend is giving you money to help you buy a home, put together a document signed by them explaining the gift and the amount, and that the gift will not need to be repaid.
  • ID (such as a drivers license or passport Lenders need to make sure they know who theyre giving their money to, so theyll want to verify your identity and that youre a U.S. citizen. Foreign nationals can get financing, but its much more complicated.

Understand How Long Preapproval Lasts

Preapproval doesn’t last forever. Check your expiration date and keep it in mind as you look at homes. Though it varies from lender to lender, preapproval is typically valid for 60 90 days. If you haven’t settled on a house, you can request a renewal by giving your lender your most up-to-date financial and credit information.

Take the first step toward the right mortgage.

Apply online for expert recommendations with real interest rates and payments.

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Why Your Credit Score Is Important

The lender will have to check your credit score and review your existing debt. A good score is considered to be 680 or above. With a score above 680 you will qualify for A level lenders such as a major bank, and therefore have access to the best interest rates offered.

If your credit score is below 680 and above 600, lenders may have a way to work around it so that youll still be able to qualify for an A level lender. Theyll determine this by looking at other details of your finances, but otherwise you will qualify for a B level lender.

A mortgage pre-approval is extremely helpful, because it gives you the time and knowledge to improve your credit score if it is weak.

Some ways to improve your credit score are paying your bills on time, keeping debt loads to a minimum/under control, paying your bills regularly, and making sure you arent consistently maxing out your credit card by having it more than 80% of your limit .

If youre unsure of your credit score, you might want to try to pull your credit. You can go to and pull your credit once a year without it deducting points or hurting your score.

Profit And Loss Statements

Mortgage Pre

Finally, if youre self-employed or own your own business, you will need to show two years worth of profit and loss statements. The lender may request additional items such as the businesses bank statements as well.

This list of items may seem like a huge mountain to climb, but dont fret. When you sit down and focus, you can easily gather all these items together in a matter of a couple of hours and begin smartly shopping for a home loan. Youll be able to start your home buying journey organized and prepared.

See how much house you can afford:

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Why Would You Want A Mortgage Pre

While a pre-approval doesnt guarantee youll get a mortgage, being pre-approved does have some advantages. Here are three reasons you might want a mortgage pre-approval:

  • It gives you confidence in your search. When you know how much mortgage you can afford, you can look for houses within your budget. That way, you wont have to deal with the heartbreak of falling in love with a house only to discover you cant afford it.
  • It puts you on the fast track to closing. Because most of your information is in the lenders system, a mortgage pre-approval accelerates the loan process once you make an offer.
  • It establishes your credibility as a homebuyer. A mortgage pre-approval shows home sellers that you have your finances in check, that youre serious about buying a house, and that you wont be denied a mortgage if they decide to sell you their home.
  • Mortgage Prequalification Vs Preapproval

    The terms preapproval and prequalification are sometimes used interchangeably, but theyre not the same.

    There are two main differences between mortgage prequalification and preapproval:

  • Prequalification is an estimate based on your stated financials, whereas preapproval requires you to submit financial documents
  • Prequalification generally doesnt involve credit check and wont impact your credit score, whereas preapproval requires a hard credit inquiry and you score will take a small hit
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    Shop Around Among Mortgage Lenders

    Generally, you only want to apply for pre-approval with a mortgage lender you’re actually likely to get a loan from. That means you should shop around for mortgage rates and terms before you apply for it.

    You should get quotes from no less than three lenders and ideally from as many as possible. That way, you can ensure you’re getting the most favorable rates possible.

    As you compare lenders, make sure you’re assessing the big picture. Look at the interest rate you’re being offered, fees you’re being charged, and whether you have to pay mortgage points. And make sure you compare similar loan types. For example, don’t compare a fixed-rate loan with an adjustable-rate mortgage, as these are two different types of loans.

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