What You Need To Know About Getting Pre-Approved for a Mortgage

Getting pre-approved for a mortgage is a crucial first step for anyone looking to buy a house. It not only helps you determine your budget but also demonstrates to sellers that you're a serious and qualified buyer. To secure preapproval from a lender, you'll need to assemble several key documents and information.

Financial Records: The lender will want to see your financial history. This includes your last two years' worth of tax returns, bank statements, and pay stubs. These documents help the lender assess your income stability and creditworthiness.

Credit Score:  Your credit score plays a significant role in the approval process. Lenders use this score to gauge your risk as a borrower. A higher credit score can often secure a better interest rate. Credit scores reflect your history as a borrower. A higher credit score is generally smiled upon during the application process.

Debt Information: Be prepared to disclose all your outstanding debts. The lender will take a good look at any out standing debts you have to help determine your approval. Debts such as credit card balances, auto loans, or student loans are all pretty easy for a lender to determine, but it is a good idea to disclose these liabilities on your application. Lenders will factor these obligations into your debt-to-income ratio which will ultimately help to determine your approval or denial.

Employment History: Employment history is a big part of the approval process of getting approved for your loan. Part of business is limiting risk. There is always risk that is associated with doing business and one of the main goals of a mortgage lender is to make sure they are taking a "good risk" when lending money to a applicant. A steady job with a consistent income is appealing to lenders and makes the applicant viewed as a lower risk to the lender. They typically want to see at least two years of employment history in the same line of work.

Identification: You'll need to provide proof of identity, such as a driver's license or passport. If a lender is going to lend you money, they need to verify who you are and how to get in touch with you in the future if needed.

Proof of Down Payment: There are some loans that are designed to have $0 down payment. Many are governmental back loans like RD (Rural Development) or VA (Veterans Affairs). If you are applying for a different kind of loan, such as a Conventional mortgage or FHA mortgage most lenders will require you to show where your down payment is coming from, whether it's from savings, a gift, or another source.

Additional Documents: Depending on your unique situation, you might need other documents, such as divorce decrees, alimony or child support documentation, or proof of other sources of income.

Once you've gathered these documents, you can apply for pre-approval with a lender. The lender will review your financial information, run a credit check, and determine how much they're willing to lend you. Keep in mind that a pre-approval is not a guarantee of a mortgage but a strong indicator of your borrowing capacity. With pre-approval in hand, you can confidently shop for homes within your budget, making the home-buying process smoother and more efficient.

For any questions you may have regarding lending standards, or if you would like some help with how to get pre-approved for a loan to purchase a home, please text "Approval" to 225-416-5045 and someone will reach out with more information.

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