The pre-approval process is an important step to take when you want to obtain a mortgage. Getting pre-approved comes with many benefits:
- Letting you know how large a mortgage loan you qualify for.
- Alerting you of the interest rates you could expect to pay.
- Informing sellers and lenders that you’re serious about buying a home.
- Giving you a neck-up above others in a competitive housing market.
While it isn’t absolutely necessary to get pre-approved, this is a step that many prospective homeowners take. The benefits listed above are reason enough to do so. An additional benefit is that it is surprisingly easy to go through the process of pre-approval. All you need to do is provide your chosen lender with the right documentation to plead your case for pre-approval.
What documents might these be? You need to verify your identity, your address, your assets, your credit and your income. It may sound like quite a hefty chore to gather up all of this information, but it really isn’t so tough. Continue reading to learn what forms of documentation are acceptable for use when seeking pre-approval for a mortgage loan.
You need to be able to prove that you are who you say you are. This protects you and others from the very real threat of identity theft. Acceptable forms of identification include:
- Government-issued driver’s licenses and ID cards
- Military identification cards
- Tribal identification cards
- Social security cards
Your social security number is likely going to be requested no matter what, as this is the most vital identifying number that can be attributed to a single person.
Different areas enforce different requirements and procedures at times, so it’s important that you can verify where you live. This is as simple as providing a utility or insurance bill that’s in your name and is billed to your address.
No lender wants to dole out funds to someone who can’t be reasonably expected to pay back their debts. They want to ensure that you make a monthly amount that will enable you to reliably make your monthly payments toward your mortgage. Paycheck stubs and tax documentation are often sufficient.
If you receive child support, alimony or regular income from another property, you will have to list this information as a part of your income, as well.
Credit Report and Score
Your social security number will likely be necessary for this step. Lenders will run an assessment of your credit report and your credit score to help determine your eligibility. The higher your score and the better shape your credit report is in, the likelier you are to qualify for a larger loan and a lower interest rate.
Make sure to have all of this documentation available to you when you pay a visit to your chosen lender. Having everything accessible immediately will streamline the process and get you pre-approved even faster!
Private & Second Mortgages
Unlike primary, or first mortgages the pre-approval is not needed for a second mortgage. Second mortgage lenders will use your home’s equity as a security against the loan and provided you have sufficient room between what the property is worth and what you owe to the bank, there should not be any issues.