If you’re dreaming of a new home, pinning all sorts of “dream home” ideas on Pinterest, and mentally planning paint colors and garden layouts, it might be time to get pre-approved for your new mortgage.
Why not just find the dream house and get approved later? Being pre-approved by a lender helps you see the home buying experience with more reality than dream. Pre-approval shows you how much you can afford to spend so you can limit your shopping to homes you can actually afford. Pre-approval is often required by real estate agents before they’ll begin house hunting on your behalf.
Here is a checklist of documents you’ll need to have on hand to make the pre-approval process go smoothly.
1. Driver’s licenses. The lender will need copies of driver’s licenses for every person who will be on the loan.
2. Social Security Cards. This is also a must-need document for every person who will be on the loan.
3. Mortgage statement. If you already own a home, you’ll need to show your lender who much you are paying on that home and if you have any equity in the property. You’ll need statements on every loan you have attached to your current home.
4. Bank statements. All mortgage lenders need to see the most recent bank statements from all the accounts of all the people who will be on the loan.
5. Pay stubs. This is how you prove your income. You’ll need 30 to 60 days’ worth of your most recent paystubs.
6. Letters. If your friend owes you $1,000 and pays you back just in time for your pre-approval, you will have to write a letter of explanation for that money. The same goes if you borrow money from a family member or friend. The source of that income must be accounted for.
7. Property tax bill. If you own your own home, you’ll need to show that you are current on your taxes.
8. Investment statements. This is everything from retirement accounts, savings accounts, college accounts, IRA’s, you name it. Even if you don’t plan to use these funds to buy your home, these accounts can help prove that you are qualified for the mortgage.
9. Tax returns. Plan to show at least two years’ worth of tax returns. These documents help verify your information. Do yourself a favor and scan these documents in and save them as a PDF so you don’t have to scan them in or fax them over and over again. Your tax return information should also include your W-2 forms from the past two years.
If this seems like a lot of work to you, imagine how mad you’d be if you lost out on your dream home because it took you two days to find your old tax returns! Gathering up the necessary paperwork can really help speed up the pre-approval and homebuying process.
Ready for pre-approval? Call us at Painesville Credit Union at 440-352-8974 and can help make your dream house come true!