When filing a mortgage application, you will be required by your lender to provide certain documentation to prove your income and assets. Lenders have to verify all the assets that will be used for your home purchase and confirm that your loan application is accurate. Your lender will most likely inform you of specific requirements, but you can save yourself a great deal of time by preparing all of the documents in advance. If you have any questions about loans available to you, you may want to review an earlier article on mortgage loans.
What’s the difference between preapproval and prequalification?
A mortgage loan prequalification is an estimate of how much house you can afford and how much money a lender would be willing to loan you. Getting preapproved means that you have a tentative commitment from a specific lender for mortgage funding.
Do I need to be preapproved?
No, you certainly do not. But at Network Real Estate, our experienced Realtors strongly suggest preapproval. With preapproval, the lender has actually checked your credit and verified your documentation to approve a specific loan amount. Knowing the amount that you may be approved for allows you and your Realtor to manage expectations and make informed decisions on which areas, neighborhoods and homes are realistically affordable.
What documents are required for mortgage preapproval?
- Proof of Income. Go back to last year’s records and compile your W-2 statements, tax returns, pay stubs and proof of any additional income. With two years of returns, they can see your income activity and discuss any potential concerns.
- Proof of Assets. In order to prove to the lenders that you have the appropriate funds available to pay for the down payment and closing costs, you will be required to present bank statements and investment account statements. Be sure to have all information regarding you bank accounts, including branch addresses, account numbers and copies or recent statements from both your checking and savings accounts.
- Credit Score. Your credit score is a reflection of the lenders confidence in your ability to repay them, and also strongly influences a lender’s decision on your loan amounts and rates.
- Employment Verification. Lenders today want to make sure they are loaning only to borrowers with stable employment, and verifying employment directly relates to your ability to repay them. Be prepared with employment contact information dating two years back.
- Identification Documentation. Your lender will need to copy your driver's license and will need your Social Security number and signature, allowing the lender to pull a credit report.Be prepared to provide your lender with any additional documentation as soon as it is requested, including documents related to outstanding loans that are currently in repayment. The more you cooperate, the smoother the mortgage preapproval will be.With more than30 years of experience in Wilmington, N.C., real estate, Network Real Estate has established relationships with many local lenders. Now that you have prepared the proper documentation for mortgage preapproval, contact Network Real Estate to begin the process of purchasing your dream home in Wilmington, N.C.