Getting Preapproved

Dated: 11/30/2019

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Getting Preapproved

Contrary to popular belief, if you’re interested in becoming a homeowner, the first thing to do IS NOT heading to open houses - it’s getting pre-approved. 

So what is a pre-approval and what do you need to do?

A pre-approval is a verification of your ability to borrow money to purchase a home. A lender will look at your credit score to see what programs you may qualify for, what interest rates are available to you, and will also need the following documentation if you’re a W2 employee:

  1. Last month of pay stubs

  2. Last 2 months of bank statements

  3. Last 2 years of tax returns

  4. Your SSN

If you’re self-employed, your lender will also want:

  1. Last 2 years business tax returns

  2. Last 3 months Profit & Loss (P&L) statements

Based on this information, your lender may be able to issue you a pre-approval. 

This pre-approval should state the maximum amount you can borrow and the financing program you’re qualified for.

It will not state an Annual Percentage Rate, or APR, because you need an actual property under contract to lock an APR.

Your pre-approval letter is good for 90 days, after which you’ll need to verify your information with your lender again.

If you’re not able to get pre-approved, a good lender will provide information on what you need to work on in order to get pre-approved in the future.

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