Mortgage Pre-Approval Checklist:
Easy as 1-2-3.

Estimated read time: 4 minutes

Everything You Need to Know About Pre-Approval.

What Exactly Is Mortgage Pre-Approval?

In a nutshell, a mortgage pre-approval explains how much you may be able to borrow to buy a home, based on your income, assets, expenses and credit history. Unlike a mortgage pre-qualification, which is a quick and rough estimate, a pre-approval with a lender involves a true, thorough evaluation of your finances.

Benefits of Mortgage Pre-Approval:

• Clear homebuying budget

  By getting pre-approved, you’ll better understand how much you can comfortably afford and feel confident in choosing a home you love.

• Competitive advantage

  

  A pre-approval letter indicates that you’re a serious buyer. In a situation with multiple offers, sellers typically favor qualified buyers.

• Negotiating power

  Sellers may also be more flexible with pricing and terms, knowing your financing is backed by a local lender – giving you more leverage to negotiate.

• Early identification of any challenges

  The review process will help you and your lender quickly spot any errors in your credit report, flag any concerns or identify other gaps early in the process, allowing time to fix any issues and keep everything moving.

• Faster closing

  By completing and verifying financial documents upfront, pre-approval can also help the final loan and closing process move more quickly.

Here’s What You’ll Need for Pre-Approval!

While every bank has its own requirements, most lenders will request a few documents to verify your identity, income and credit health for a home loan.

1. Personal ID

   Typically you’ll need a government-issued ID, such as a driver’s license or passport, along with your Social Security card. An Individual Taxpayer Identification Number (ITIN) may also be accepted for new Americans.

   This information will be used to confirm your identity and run a credit check, so your lender can review your overall credit score and history.

2. Account statements

   That includes the latest statements from your checking, savings, investments and retirement accounts. Together, this will give your lender proof of your financial assets, along with a better understanding of your debt-to-income (DTI) ratio when it comes to current debts and expenses.

3. Address information

   Your mortgage lender will need all addresses where you’ve lived for the past two years. If you rent your current residence, plan to include contact information for your landlord(s), too.

4. Employment records

   To prepared for your pre-approval, gather your:

   • Most recent year-to-date pay stub(s)
   • Copies of your W-2s
   • Federal income tax returns from the past two years

5. Other documentation (if applicable)

   Depending on your circumstances, you may also need to provide additional documentation. It can vary a bit! For example, if you’ve recently divorced, a divorce decree may be required. Or, if you’re self-employed, your lender may request a few extra documents from your business to verify your income.