Getting pre-approved for a mortgage does always help to put yourself ahead of competition among other buyers when looking to buy a new home, as it proves that you can afford buying the property in the first place.
What do we need to get pre-approved? We have to verify our income, employment, assets and debts. Depending in different factors, such as if you are self-employed, or if your income is coming from different sources, you may need to give more documents to your lender.
Let’s take a look at what documents we need to hand to our lender to get pre-approved for a mortgage:
1. Income and employment: You need to show how you make your money, if you’re working under only one contract this process will be much easier.
*W-2 wage earners: Copies of W-2 forms and your two most recent payroll stubs. If income includes overtime, bonuses or differential pay, you may need your most recent end-of-year payroll stub.
*Self-employed,freelancers and independent contractors: they would need to proportionate a year-to-date profit and loss statement and two years of records, including the Form 1099s
*Real state income: if you want to use this to apply for a mortgage, you need to give the documents related to the rental income, address of the property,lease and the property’s current market value.
2. Tax returns: you will be asked to share the two most recent copies of federal and state returns
- Bank statements: copy 60 days’ worth of statements of all the accounts you’d use as assets to qualify for a mortgage(even the blank pages)
- Retirement and brokerage accounts: two months’ worth of statements from IRAs,investment accounts and CDs, plus the last quarterly statement from 401(k), which shows the vested balance. Don’t forget to include all the pages!
- Monthly debt payments: include all of them,with each creditor’s name and address and your account number, loan balance and minimum payment amount.
- Real estate debt: If your current property is mortgaged, make sure you have your most recent statement — showing the loan number, monthly payment, loan balance and the lender’s name and address — and the declaration page of the insurance policy.
5. Other documents you may need(some depending on your situation):
- 30 days of paystubs
- Schedule K-1 (Form 1065) for self-employed borrowers
- asset account statements (retirement savings, stocks, bonds, mutual funds, etc.)
- driver’s license or U.S. passport
- divorce papers (to use alimony or child support as qualifying income)
- gift letter (if funding your down payment with a financial gift from a relative)
So that’s all for today, hope you found this article useful so far and don’t hesitate in reaching me out if you have any questions or need a consultation.
Stay positive and stay hungry!
Make it a great day,
Sean La Rue
Full Youtube Video: https://www.youtube.com/watch?v=mt7kVH1Qc7A&t=2s