When it comes to buying a home, one of the first steps you’ll need to take is securing mortgage pre-approval. Pre-approval is a crucial process that gives you a better idea of how much you can borrow and assures sellers that you are a serious and qualified buyer. However, to get
pre-approved, you’ll need to provide specific documents to your lender. Having these documents ready can help streamline the process, saving you time and ensuring a smoother home-buying experience.
Proof of Identity
The first thing you’ll need when applying for pre-approval is proof of your identity. Lenders need to verify who you are to prevent fraud and comply with government regulations. The documents you may need include:
- A valid government-issued ID (e.g., passport, driver’s license, or state-issued ID card)
- Social Security number (for U.S. buyers)
This information helps your lender run a background check, verify your credit history, and ensure that you meet all legal requirements.
Proof of Income
Lenders want to know that you have a steady income to make your mortgage payments. Providing proof of income helps them assess your ability to repay the loan. Documents typically required for this include:
- Recent pay stubs (usually covering the last 30 days)
- Tax returns (for the past 2 years)
- W-2 or 1099 forms (if you’re employed or self-employed)
- Bank statements (for the past 2 to 3 months)
- Any other forms of additional income (e.g., rental income, alimony, bonuses, etc.)
If you’re self-employed, lenders may request additional documentation like profit-and-loss statements or 1099 forms. It’s important to be transparent about all sources of income to avoid delays.
Proof of Assets
In addition to proving your income, lenders will also want to see that you have enough savings for a down payment and closing costs. Proof of assets helps the lender assess your financial stability and your ability to cover upfront costs. Documents you may need include:
- Bank statements (showing savings and checking account balances)
- • Retirement account statements (401(k), IRA, or pension)
- • Investment account statements (stocks, bonds, etc.)
Having at least 20% of the home’s price saved for a down payment is ideal, but some loan programs may allow you to put down as little as 3-5%.
Credit History
Your credit history plays a major role in determining whether you qualify for a mortgage, and what your interest rate will be. Lenders will review your credit report to evaluate your payment history and assess your creditworthiness. They typically look for a score of 620 or higher, though this can vary depending on the loan type. The documents required for this part include:
- Your credit report (which the lender will pull themselves)
If you’ve been denied credit in the past or have a lower credit score, it’s important to address any issues before applying for pre-approval.
Employment History
Lenders like to see a stable work history to ensure that your income is reliable. Typically, they will ask for:
- A list of all employers for the past two years
- Contact information for your current and previous employers
- A letter of employment from your current employer, if requested
Having a consistent work history (at least two years with the same employer or in the same field) increases your chances of pre-approval.
Debt Information
To determine how much you can afford to borrow, lenders need to understand your existing debts. This helps them calculate your debt-to-income ratio, which is a major factor in the pre-approval process. Documents you may need to provide include:
- Credit card statements
- Auto loan statements
- Student loan statements
- Any other monthly debt obligations
Being upfront about your debts and liabilities will allow the lender to give you a more accurate estimate of what you can afford.
How Orange Mortgage Can Help In Documents Process For Pre Approval!
At Orange Mortgage, we understand that the pre-approval process can be overwhelming. That’s why we’re here to help guide you through every step, ensuring you have all the necessary documents and are fully prepared. Whether you’re a first-time homebuyer or refinancing an existing mortgage, we work with you to find the best options available for your needs.