5 Requirements for Mortgage Pre-Approval

A pre-approval form gives you an advantage in the competitive mortgage market. So you will need to provide relevant information and proof documentation to qualify for a mortgage pre-approval. The needs vary among lenders, but what are the five typical requirements?

1. Personal Identification

To avoid impersonation and fraud, your lender must verify that you are who you claim to be. Different documents are acceptable personal identifiers, but each must be state issued and have a photo. Your lender will also run checks to confirm the validity of each document.

Accepted viable identification documents include:

• State-issued ID card or driver's license
• Individual tax identification number (ITIN) or social security number
• A valid passport call USA alien card
• Your green card if you are a non-USA citizen

2. Employment Forms

You need a stable source of finances to pay your mortgage. Lenders use employment information to determine your mortgage repayment ability. If you are not self-employed, employment forms prove your employment status. In addition, lenders will ask about your work address and contact details to validate your job.

If you have recently switched jobs, you might have to provide information about your current and former employers. However, your employer does not give out your information without your approval. So, you must sign a form that authorizes your employer to provide information to a prospective lender.

3. Bank Statements

Bank statements reveal your financial position and ability to pay the initial payment and closing costs. Besides, some lenders will require you to maintain additional cash reserves. Thus, you will need to provide a history of your statements for the last few months.

Your lender examines your cash flow to determine your level of stability. Bank accounts also reveal any unusual activities in your account. For instance, your lender has every right to ask about substantial deposits and unexplained sources of funds.

4. Good Credit Scores

The credit score depicts your creditworthiness and lets your lender define whether you are a credit risk. Lenders have a minimum score that qualifies you for mortgage pre-approval, which stands at a score of 620 or above. Nonetheless, some more lenient lenders accept a score of 580 and guide you to improve your score.

You must not submit documents to your lenders to show your credit score. Instead, you will provide your social security number and grant your lender permission to check the report. A higher score translates to lower rates. Conversely, a lower score translates to a larger down payment and higher interest rates.

5. Evidence of Assets Ownership

Lenders must ensure that you are financially able to pay the down payment and closing cost. You must also own assets to complete payment if a misfortune happens after the down payment. For instance, if you close down your business or lose your job after you have closed the house, the lenders must have a guarantee that you will still repay the mortgage.

Lenders do not consider cash assets; you must provide paperwork for any property you present as evidence of ownership. Finally, assets comprise your net worth and could be from any of the below sources.

•  Money market accounts
•  Checking accounts
•  Saving accounts
•  Brokerage accounts
•  Retirement accounts

Asheville & Arden, NC Professional Mortgage Brokers

A pre-approval is one of the vital things to do before you buy a home on a mortgage. But, before you go through a pre-approval, ensure you have all the requirements discussed above. Finally, Cornerstone Residential Mortgage is your number one choice for all the finances you need to get a new home. Therefore, Contact us today for excellent loan options and a match for your ideal mortgage.