The pre-approval for home loan process is more complicated and formal. You should complete the official application and pay the fee. Then complete the required documents, so that the lender can check your credit score and financial background. By seeing the data, the lender will determine the amount of the loan to approve specifically. It will also let you know the interest rate and in what rate you will be locked.
Prepare the Proof of Income Documents
The proof of income documents are including:
• The pat stubs for 30 days that describe your income and also the year-to-date income
• The Federal tax returns as long as two years
• All asset account in a quarterly statement or 60 days such as your savings, checking and other types of investment accounts.
• W-2 statements in about two years.
Besides, the lender may require kind of other documents of you such as the additional income proof like bonuses, alimony, etc.
Show Your Assets
The document pre-approval for home loan also requires the presentation of investment account statements and bank statements so the lender will know that you can pay the down payment and also the closing costs and cash reserves of the home loan. If the down payment will be paid by a relative or a friend, then you should prepare the notarized Gift Letters that describe that it isn’t loan and you don’t need obligatory repayment. No matter how you get the fund for the down payment or anything that change your finance, you should write it on the paper trail so that the lender will count.
The Document Proof of Good Credit
Most of home loan lenders also stand-in the interest in lowest rates for the customers that have 740 or higher credit score. If the credit score is lower than the number, the customers should pay the interest in a little higher rate. Otherwise, they should pay some additional discount points to make lower the interest rate. On the other hand, for FHA loan, the lenders commonly require 620 or higher credit score, particularly for those who prepare 3.5% down payment. Meanwhile, for the customers that have lower than 580 credit score, you may need to pay at least 10% down payment. You also can find lenders that can work with low credit score borrowers. They commonly will suggest some ways for you to improve the pre-approval for home loan.
Verification of Employment
The lenders will also need to see the pay stubs of you and may call your employer to do employment verification. It will let them know whether you are still employed and find to know your salary. For those who recently move to another job, the previous employer may also be called by the lender. The employment verification is done by the lenders to make sure that you have stable work history. For the self-employed one, you need to show additional paperwork that describe your income and business significantly.
Other Required Documents
Besides those documents above, you may also need to provide the state ID and driver’s license copy. The lenders will also need to know your social security number and also your sign to let the lender getting your credit report. Make sure you have prepared all documents and additional paperwork soon as the lender’s request. The fast preparation will also smoother the process of the home loan approval.
On the other hand, you also may need to prepare other documents if you are in certain circumstances or have unusual income. For example, for the divorced borrowers, the lender will ask to see the decree. Those who have filed bankruptcy, the lender will need the discharge documents in full copy. Additionally, you need to prepare the lease copy if you get some rental income as additional documents of pre-approval for home loan.