Since it seems like homes are flying off the market, what do you need to have for a preapproval? It's back to the basics compared to a few years ago. Remember the number 2 -you need 2 of most everything!
You will need to provide your loan officer with the basics:
-2 paystubs (with year to date information on them)
-2 months of bank statements (make sure you have all the pages)
-2011 and 2012 tax returns and w-2's
Depending on your situation you may also need to provide a copy of a divorce decree, school transcripts, investment account statements, bankruptcy documents, foreclosure information and mortgage statements. Every file is a little different so it will depend on your own situation.
We need to verify employment for the past two years, how much your income is and that it is stable. Basically your income needs to be verifiable and stable. If you are self employed, we need to be able to verify at least two years in the same business.
We have to verify all money used in the transaction. So if you transfer money between accounts, try to keep that to a minimum during your mortgage application. If you are getting a gift, we will need to document it.
The home has to appraise. The appraisal will make sure the value is there and that there aren't any work orders on the property.
Basically if you remember the 4 C's of lending, you will know what we need.
- Capital – the amount of money you have
- Capacity – your income and if it's stable
- Credit History – your use of credit and payment history
- Collateral – the appraised value of the home
Underwriters will look at this information to make sure you can qualify for the home you are looking at. Remember that just because we say you can qualify for a home, that doesn't mean you can afford it. Take some time to think about your expenses and make sure you are comfortable with the payment. We work off gross income and do not include things like car insurance, daycare and other expenses. Decide what your limits are and look within those limits. You are the person making the payments and you want to be comfortable with your house payment. Once you know that you are approved and what you are comfortable spending, start shopping! Have fun house hunting!
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants – Email – Website
