Once you have an idea of the type and size of home you want and the area you’d like to look in, you need to be pre-approved by a lender. Most sellers in today’s market require a pre-approval letter prior to reviewing any offer and in many cases prior to setting up a showing appointment of their home.
Determine How Much Home You Can Afford: Pre-approval helps you avoid buying less home than you can afford or being disappointed if you don’t qualify for as much as you had hoped.
Shows What Your Total Investment Will Be: You’ll know approximately how much money you’ll need for down payment and closing costs.
Let’s You Know What Monthly Payments Will Be: You’ll have a close estimate of what your monthly principal, interest, taxes and insurance (PITI) will be.
Identifies the Loan Programs You Can Qualify For: With the wide variety of loan programs available, it is important to know which types you qualify for and which will best suit your needs.
Strengthens Your Offer: Sellers today will not accept an offer without a pre-approval letter and it shows that you have taken the time to be interviewed by a lender and can qualify to purchase their home.
In order to be pre-approved, the lender will need the following:
Your employment history and income
Your monthly debt and obligations
The amount and source of cash available for down payment and closing costs
Last 2 years of bank statements (all pages)
Last 2 years of tax returns
Last 2 months of paystubs
When you are pre-approved, you’ll receive a letter to give to your real estate agent that they can provide to the listing agent upon arranging for a showing appointment and with the offer.