Part 2: Mortgage Preapprovals
If you read our previous blog post on mortgage preapprovals, you already know how important it is to have one before you start looking for a home.
A mortgage preapproval lets you know how much house you can afford, makes putting offers in more competitive and also locks in interest rates for a set period of time. Now that you know how important a preapproval is, it’s time to think about what documents and information you will need to gather before actually getting a preapproval.
What You Need to Get Pre-Approved for a Mortgage:
- Photo ID – this one is pretty obvious, but it’s essential to have official photo identification when applying for a mortgage preapproval.
- Proof of income – usually in the form of pay stubs, a T-4 slip or a personal income tax return.
- Employer verification – usually a letter from your employer, along with a record of your current salary, is required.
- Proof of assets – go to your mortgage appointment with account numbers for your bank accounts and investments so that it’s easy for your lender to review your assets. You’ll also need to have details handy about any debts, car loans, student loans, lines of credit, etc. that will impact the amount of your mortgage pre-approval.
- Proof of down payment – you’ll need to show exactly how much you have saved for your down payment and if your down payment is a gift, you’ll need a letter from the gift-giver which states you don’t need to pay back the sum of money.
- Good credit – be prepared for your lender to run a credit check on you. Lenders offer the best rates for customers with good credit ratings so you can be sure this is part of the preapproval process.
Others Things to Keep in Mind with Mortgage Preapprovals:
- If your lender doesn’t review the above qualifications when giving you a preapproval and only gives you a rate guarantee, be careful. This means that you will still need to be approved for the actual mortgage which means the amount of mortgage you’ll be granted could change, suddenly making that dream house unaffordable.
- Get a second preapproval. If 45-60 days have passed from when you got your initial pre-approval and rates have risen, consider getting a second preapproval elsewhere to see how rates compare. Since a lender will only give you one pre-approval at a time, it might be worth it to see what the competition is offering.
- Reset your pre-approval if necessary. If the end of your pre-approval guarantee is coming up and interest rates remain low, reset your preapproval to protect yourself in case rates rise.
If you have any more questions about mortgage preapprovals that I didn’t cover in this post, please feel free to reach out to me via email or by phone at 519-222-1540. I’d be happy to give you more details and offer next steps.Posted by Greg Dewar on