One of the first pieces of advice you’ll probably receive if you’re interested in buying a home is to get pre-approved for a mortgage before you shop. While a pre-approval letter has always been an important first step in the home buying process, it’s even more critical in today’s hot and crowded housing market.
What is a Pre-Approval Letter?
A pre-approval letter states that a lender has tentatively agreed to loan you up to a certain amount of money to purchase a home. However, a pre-approval letter doesn’t guarantee you the loan as circumstances such as income or mortgage rates can change.
Why Do I Need One?
Here are a few reasons why getting a pre-approval letter before shopping for homes is so important:
- It helps determine how much house you can afford given your current financial situation. That way, you’re not shopping for homes that are outside of your budget.
- Having a pre-approval letter in hand means sellers will take you more seriously as a buyer because you already know how much you can afford and that a lender is willing to loan you that amount.
- You’ll save time during the closing process with a pre-approval as a lot of your financial information will already be available to your lender.
Documents To Provide
Here’s some paperwork you may need to during the pre-approval process:
- Township Assessed Value Letter
- Current Mortgage Statement, if Applicable
- Most recent Property Tax Bills
- Divorce Decree, if applicable
- 1 month of your most recent paystubs
- 2 years of W2s
- 2 years of signed Federal Income Tax Returns with proof of filing
- 2 years of signed Business Federal Income Tax Returns with proof of filing
- Homeowners Insurance Quote
- 2 months of current Bank Statements
- Current 401k/Investment Statements
- Social Security Benefit Notice
- Purchase Agreement
Start the pre-approval process with United Financial today so you can start creating memories in your new home!