The first step in any home search is finding out exactly how much home you can afford and securing the financing to make the purchase. While you can get a rough estimate through pre-qualification, taking the extra step to obtain pre-approval will give you some added advantages.
Pre-approval helps you:
• Understand your financial condition
• Know exactly how much home you can afford before you begin your home search
• Strengthen your purchasing power when making an offer
When you find a home you love and are ready to make an offer, your mortgage pre-approval lets the seller know that you’re serious and fully prepared to buy their home, putting you in a stronger position than other potential buyers.
Here are some of the documents that you will need to provide your lender to get the pre-approval process started:
• Current pay stubs, usually for the last two months
• W-2s or 1099s, usually for the last two years
• Tax returns, usually for the last two years
• Bank statements
• Investments/brokerage firm statements
• Net worth of businesses owned (if applicable)
• Credit card statements
• Loan statements
• Alimony/child support payments (if applicable)
These are the first steps to gaining pre-approval to begin your homebuying journey. Finding the right agent will help you succeed throughout the process! Check out our post on ‘Why You Need A REALTOR® When Buying Your Next Home‘ and don’t miss our next post about what you may need to provide a lender when applying for a home loan!!