Mortgage 101: Why Pre-Approval is Your First Step
Mar 25 2021
The time has finally come: you’re ready to pull the trigger. Congratulations!
The first step to ultimately getting the keys to your new home is getting pre-approved for your mortgage. Follow this guideline for an easy road to pre-approval.
Step 1: Determine your budget
Once you’ve decided on the type of home you want, where you want to live and your wish list of features, it’s time to set your budget. The online calculator takes into account what you can afford, additional mortgage costs, loan information and your state and federal tax rate to help determine your maximum budget.
(If you’re not comfortable determining a budget on your own, your mortgage lender will be happy to help.)
Step 2: Gather your documents
In order to apply, you’ll typically need the following information:
- Residence history for the past 2 years
- Employer name(s), job title and dates of employment for the past 2 years
- Current pay stubs covering a full, 30-day period
- W-2s for the past 2 years (and 1099s and K1s, if applicable)
- Federal tax returns for the past 2 years – all pages and schedules and business tax returns (25 percent or more ownership), if self-employed
Step 3: Apply online or in-person
Once you’ve gathered the necessary documents, it’s time to choose a trusted mortgage expert near you. After choosing a lender, you can apply online or schedule an in-person appointment to get pre-approved.
After submitting your pre-approval application, your lender will follow-up with a phone call or email as soon as possible. Don’t hesitate to reach out with questions throughout the process.
Tips for success
During the pre-approval process, your full credit report will be pulled. Follow these tips to ensure your credit score and history are in their prime.
- Make bill and credit card payments on time.
- Avoid applying for additional credit or making any significant purchases on credit.
- Keep your credit card balance below 30 to 50 percent of the card limit.
Get pre-approvedFind your lender today.
What to check out next
- What are Mortgage Points and Should I Pay Them?
- Mortgage Shopping? Know Your Rates
- Qualifying for a Mortgage May Be Easier Than You Think