If you are a serious homebuyer, you must know that most lenders expect buyers to have a pre-approval letter. However, the lenders will be willing to do some negotiation, if you have a pre-approval letter in your hand. Getting pre-approved for a mortgage can be time-consuming and need some documentation.
A pre-approval letter in your hand will help you find the best deal that meets your financial requirements. You will get the opportunity to lower your interest rate and budget with the lender. How to get a pre-approval letter? Here we will tell you everything about pre-approval mortgage Aurora.
Table of Contents
1.Pre-approval vs Pre-qualification
Firstly, you must know the difference between pre-approval and pre-qualification. A pre-qualification will tell you how much loan amount you can afford.
On the other hand, pre-approval is valuable in that the broker will check your credit score, documentation to approve a particular type of loan that meets your financial requirements.
However, the pre-approval letter will last for 60 to 90 days. You will get various benefits after getting a pre-approval letter in your hand.
You will get the opportunity to discuss loan options and negotiate with the lenders.
The lender will check your credit score, financial status and reveal any problem, so you will get to know what amount of loan you can borrow.
2.Requirements to get pre-approved for a mortgage
If you are looking to get pre-approved for a mortgage, start gathering some vital documents. You must need to submit proof of assets and income to get a pre-approval letter in your hand.
Here we will show you what documentation you need to gather to get a pre-approval letter in your hand.
- You must submit your proof of income to get a pre-approval letter. Make sure to submit W2 wage statements to get pre-approval mortgage Aurora. You have to show your recent pay stubs, year-to-date income and proof of additional income like bonuses and alimony.
- You have to submit your investment account statements and bank statements. It will show how much down payment and closing cost you can afford.
However, the down payment is a percentage of the selling price, depending on the type of loan. Moreover, pre-approval depends on the FICO credit score and debt-to-income ratio.
3.Sustain a good credit score
If you are looking to get a pre-approval letter, you must maintain a good credit score. You will get some benefits of sustaining a good credit score.
Having a credit score of 760 or higher than that will give you the opportunity to lower down your interest rate. If your credit score is not good, you have to pay off a higher down payment.
4.Employment verification
You must know that lenders will only lend to those buyers who have stable employment. The lender will check your recent stubs and call you to verify your employment and salary information.
If you changed your previous job for some reason, they call your past work station.
On the other hand, if you are running a business, you must submit additional paperwork concerning your company. A self-employed person has to show their most recent tax returns.
5.Other documentation
You need to submit some other documentation to get a pre-approval.
- Driving license
- Social security number
- Asset account statements
- 30 days pay of stubs
- Income tax returns
- Schedule K1
Wrapping up
So here are some things you should know about pre-approval mortgage Aurora. However, getting a pre-approval will give you the opportunity to lower your interest rate, discuss loan options and negotiate with lenders.
