Mortgage Pre-Approval Before You Make An Offer:
With Spring fast approaching it's a great time to for potential home buyers to get ready for what is typically the busiest time of the year for buying and selling homes. What makes this year a bit different than last year is that in most markets it's a buyers market where as last year sellers in were in command. Bidding wars were not uncommon last Spring and some homes sold within days of being listed. Things have changed in many markets and sellers are having to price their home right to get home buyers to submit offers. Below we'll cover the things you'll need to obtain a mortgage pre-approval before you make an offer on a home.
Gather Your Documentation:
Doing this before you do your research on which mortgage company you want to work with is so important. The reason is that the Loan Officer is going to require this information to obtain the actual pre-approval and underwritten approval. And if you have it prior to searching for reputable mortgage companies then that will help avoid delays if you have an accepted offer.
W-2 Employees:
Gather your two most recent years of W2s and your two most recent paystubs if you are paid every two weeks. If you are paid weekly gather your four most recent paystubs and if you are paid once a month then gather your most recent paystub. If you have rental property, or you have a side business or investments in a partnership that issues you a K1 tax form then gather your most recent two years of tax returns (federal only; all pages/all schedules). If you own rental property it's also a good idea to keep a copy of your lease agreement(s).
Self Employed:
If you are Self Employed please obtain your two most recent years of tax returns; personal and business (federal only). Please be sure to include all pages and all schedules (including your K1s if received). And if you own rental property make sure you have your lease agreement(s) handy in case the Loan Officer needs them.
Retired:
Obtain your two most recent years of tax returns and a copy of your benefits statement if you receive Social Security income and/or Pension income. If you receive taxable income from investments you should be ready to send in copies of those asset statements (two years).
Assets:
Obtain the most recent two months of statements (all pages) from which the down payment and closing costs will come from. Be sure to include all pages; front and back of each page.
Having these items organized prior to contacting mortgage companies will increase your chances of receiving a valid pre-approval and make the process much easier.
The Pre-Approval:
Now you're ready to obtain some quotes and decide which mortgage company you plan on working with. And who could forget checking current mortgage rates online as well; just make sure you're using a trusted online source. So the first step should be a visit to the Better Business Bureau's or the Business Consumers Alliance website. Once you're their search "mortgage companies" and a list of the top rated mortgage companies in your area will be listed. Stay away from companies that have low ratings and lots of questionable reviews. Using those companies will most likely end up costing you money and a lot of wasted time. Find 2-3 (even 4 if possible) of the top rated companies in your area and contact them for a quote. Let them know upfront that you have your documentation and you'd like to obtain a pre-approval. But first; let them know you want a quote first and from the quotes pick one or two companies to get pre-approved with.
