Link to this page Print RSS  

11 Ways To Prepare for the Home Loan Preapproval Process

07/29/2010
Obtaining home loan preapproval has many advantages. It streamlines your search for a new home. It expedites the process of purchasing a new home. Plus, preapproval can give you an advantage over other buyers and put you in a better position to negotiate with the seller.

How?

Home loan preapproval answers all of the important questions you need to know. It tells you the maximum amount you can afford to spend on a new home purchase. It advises you about the costs you should expect each month and can help you pin down the best mortgage rates for your situation. Preapproval provides you information about the maximum loan amount and monthly payment for which you qualify. Preapproval also determines your down payment requirements. And best of all, preapproval practically guarantees you'll have a home loan when you need it. It can also help you gain approval for a home loan refinance or a loan modification.

Just like mortgage approval, the preapproval process requires you to complete an application, pay a fee for your credit report, and provide the lender with all of the documentation needed to complete the process.

Here's what you'll need to get the preapproval ball rolling:

1) Money to pay for the fees associated with the preapproval process: application fee, credit report fee, origination fee (if applicable) and points (if applicable).

2) The social security number of everyone listed on the preapproval application.

3) Itemized lists of all debt and all sources of income.

4) Account numbers, monthly payments, and balances for all credit card, bank and loan accounts. Bank addresses are also required.

5) Addresses where you've lived during the previous 2 years.

6) Employment information for the previous 2 years including all employers' names, addresses and contacts.

7) Information and documentation supporting all negative issues on your credit profile.

8) A COE or Certificate of Eligibility (only applicable for a VA loan).

9) Itemized list of assets including property, stock, bonds, and investments plus the current market value of each.

10) Copies of legal documents such as divorce decrees, alimony and/or child support judgments.

11) Tax returns for the previous 2 years (if self-employed) or W-2 forms if newly employed.

Because you haven't selected a property yet, two things that won't happen during the preapproval process are a home inspection and a home appraisal. Therefore, mortgage preapproval will depend on the outcome of these processes.

Link to this page Print RSS