You should always start your home purchasing process at a lender’s office. Obtaining a pre-approval letter is the first step to ensuring you are off to a great start with your new home purchase. As the home buyer, you’ll want to know the maximum amount you’re able to borrow, the terms and the details surrounding the home loan such as dates, times, initial and estimated costs. Obviously it’s important to not spend your maximum loan amount but rather make a decision based on your monthly income and your comfort level for increasing monthly residual expenses.
What’s the difference between pre-approval and pre-qualified?
Pre-qualification is an estimate of how much someone can afford to spend on a home, while pre-approval provides a definitive answer regarding the loan, the loan amount and its terms. Pre-Approval means creditors have verified the documentation for a specific loan type and have provided a timeframe to purchase, typically sixty to ninety days. The final loan approval requires the buying party to have the proper appraisal work performed and submitted to the lender so it can be applied to the specific property.
What is required for a mortgage pre-approval?
Proof of Income
- W-2 wage statements of the past two years
- Recent pay stubs showing income and year to date income
- Proof additional income
- Two (2) most recent years’ tax returns
Proof of Assets
- Bank statements
- Investment account statements
The borrower must be able to prove they have the funds and or means to pay the initial and final costs of the home purchase.
- Credit score of 620 or higher is required to approve a conventional loan
- Credit score of 620 or higher is often required for some Federal Housing Administration loans.
- Lowest interest rates for mortgages typically start with a credit score of 760 or higher.
- Lenders often require those with lower scores to make a larger down payment
Northwest Mortgage helps with mortgage pre-approvals
We’ve helped over 2,500 individuals in the NorthWest Indiana region purchase and or refinance their homes. We’ve got the experience, we’ve got the expertise and we’ve got the client reviews to ensure you that you’re in great hands with your mortgage pre-approval needs.