How to Get Pre-Approved For a Home Loan

 How to Get Pre Approved For a Home LoanHow to Get Pre-Approved For a Home Loan

Before you start shopping for your new home, take the steps required to get pre-approved for a home loan. Being pre-approved gives you a few advantages when you are shopping for a home:

You know how much you can afford to pay for a home.  This will help the Realtor to show you homes that are within your price range, reducing frustration and time.

It makes you a more attractive buyer to sellers because they know you can get a loan to purchase their home.

In order to get pre-approved for a loan, you need to:

  • Find a lender. Work with a lender who you are comfortable with.  Get a recommendation from your Realtor.  Understand the terms and rates as they may vary and you need to compare apples to apples.
  • Provide your financial information. Be prepared to supply your annual gross income, current expenses and debts. Give the lender copies of your last two income tax returns, W2 or 1099 statements for the last two years, bank statements (checking and savings accounts) for the last few months, two most recent paycheck stubs or proof of income and any retirement savings account statements.
  • Fill in your employer information. You’ll need to give your employer’s name, address and how long you have worked at your current job. If you’ve been at your current job for less than two years, be prepared to provide information about past employers.
  • Allow the lender to run your credit report.

Be very precise when disclosing income and debt levels. The lender will verify each item to make sure it is accurate. Misrepresenting information on the pre-approval form will only hurt you in the end.

Understand the difference between a  pre-approval for a loan and a pre-qualification.  Typically with  a pre-approval, the loan officer has validated the information you have supplied.  Whereas with a pre-qualification, the loan officer takes your information and processes the information you have supplied verbally.  Banks refer to documents differently, so be sure to be clear with your loan officer what your specific needs are.

If you want the most concrete approval, ask for the commitment letter.  This means not only has the loan officer verified the information you supplied but the underwriters have as well.  (We may be getting ahead of the process, banks typically will give commitment letters once you have a signed contract to purchase a house, but it’s good to understand where the commitment letter falls in the process).

If you would like more information about getting pre-approved for a home loan, or would like a referral to a lender, feel free to contact us.  Let us help you shop for your new home on the North Fork!

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