August 15 - 3 Things You Need to Know About Mortgage Preapprovals
3 Things You Need to Know About Mortgage Preapprovals
You’ve read here before about the important distinction between a preapproval and a prequalification and why the distinction is important. First, when you make an offer on a home the sellers want to see how serious you are about the process and whether or not you’ve even talked to a mortgage company. Second, with a preapproval you can shop for a home with the knowledge that all you need next to do is find a property and provide a copy of your signed sales contract to your lender. Beyond that, here are three things you need to know about mortgage preapprovals.
Documentation. Be prepared to provide your fair share of paperwork. When a lender reviews an application for a preapproval the lender realizes there is no property as of yet but documents the loan application is if there were. Your credit report is pulled and credit scores examined. You’ll be asked to provide your two years most recent W2 forms along with recent pay check stubs covering a 30 day period. If you’re self-employed, you’ll need copies of your last two years of both personal and federal income tax returns. Bank statements showing sufficient funds for a down payment and closing costs must be provided.
Dating. Speaking of documentation, when a lender performs a preapproval the lender does so based upon the most recent documentation you have. If you’re asked to provide pay stubs and you find copies of some from a few months ago, that won’t work. They need to be within a 30 day period. So too do your bank statements need to be within that time frame. If you’re shopping for a home and it’s been three months since your preapproval was initially performed, while your preapproval letter may be okay for the sellers the lender will still update your file once you have identified a property.
Don’t Change. Once your preapproval is issued it’s important that you don’t change anything. Don’t rent another apartment. Don’t change jobs even if the new job pays you more. Switching employers means the mortgage company needs new pay check stubs and getting those new stubs covering a 30 day period can be a challenge as employers typically delay the first pay check. If you’re thinking of making any important changes while you’re shopping for a home, speak directly with your loan officer first.
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