In our last blog entry we explained the importance of starting the preapproval process three to six months before you plan on moving into your new home. Preapproval will provide you with an accurate snapshot of your financial status and will give you an estimate of your budget for your home.
In the preapproval process, your loan officer will compile data from several of your financial documents in order to get a clear picture of your financial situation.
In order to get you preapproved, your loan officer will need the following documents:
– W-2s and tax returns (2 years)
– Recent Bank Statements and Retirement Account Statements
– Recent Pay Stubs/Proof of Income
Once the loan officer has all of this documentation, you can be preapproved within 24 to 48 hours.
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The Importance of Preapproval
In today’s housing market, a letter of preapproval from your mortgage loan officer is very important when shopping for your new home. Many sellers and seller’s agents will only take a buyer seriously if they have obtained preapproval. Preapproval benefits both the buyer and the seller. The buyer is given a relatively solid estimate of what he or she is able to afford and the seller is given a sense of security that the buyer is serious and will be able qualify for a mortgage for the home. Having a letter of preapproval can even help differentiate you from other buyers and put you at the top of the seller’s list.
Make sure you don’t confuse preapproval with prequalification. Prequalification can be done over the phone and is a very broad, quick estimate of what you will be able to afford. Preapproval looks at your full financial picture in detail and is a significantly better estimate of what amount you will be able to borrow.
Preapproval can be done relatively quickly, provided that you have all of your financial documents in order. You will need to provide your mortgage loan officer with:
Ø W-2 Forms (2 years)
Ø Tax Returns (2 years)
Ø Recent Bank Statements and Retirement Account Statements
Ø Recent Pay Stubs/Proof of Income
Once you are able to produce these documents, your loan officer can check your financial history and give you a good idea of how much you will be able to borrow for your mortgage. Knowing exactly what your price range is can save you a lot of time searching in the long run because you will know which houses are in your price range.
If you are taking your time shopping around for real estate, don’t let your letter of preapproval expire! Most letters of preapproval are valid for 60 days, and will need to be re-validated by your lender. This is necessary because your financial situation can potentially change within the 60 days and your lender wants to be sure that they have an accurate picture of your financial history and can guarantee you the quoted amount.
You will want to get preapproved for a mortgage as early as possible in the home buying process. Getting a letter of preapproval will start you off on the right track and save you a great deal of time and effort.
If you are looking to get preapproved for a mortgage, don’t hesitate to call us today at 865-909-0211! Keystone Mortgage provides Tennesseans with the best mortgage experience, period. So what are you waiting for? Get that dream home and apply here now.