5 Ways to Get a Pre-Approved Mortgage – Overview
Applying for pre-approved mortgage is an exciting, but often a nerve-wracking moment for any potential homeowner.
There is always that fear of being turned down by the bank, especially when the perfect house is on the line.
The good news is this: taking a couple of key steps before you approach banks will greatly increase your chances of securing a pre-approved mortgage.
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Below are 5 ways to increase your chances of getting a pre-approved mortgage.
5 Ways to Get a Pre-Approved Mortgage
1. Prove your income
This is perhaps the most important part of securing a pre-approved mortgage. Are you earning enough money to cover the mortgage payments? Do you have a full-time job, and a verifiable history of steady income? These are crucial questions for banks, and they need documents answers before offering you a pre-approved mortgage.
Understand that from a bank’s perspective, it’s all about risk-management.
• Have your W-2 statements ready—not just the current statements, but going back a number of years.
• Provide detailed information about your current and past employers, and make it easy for the bank to contact the right people.
• Go the extra mile to show the bank, using credible documentation, that you are a responsible earner and a solid bet.
2. Establish good credit
Your credit score is the bank’s way of knowing how well you have managed financial obligations in the past. If your score is mediocre to low, you still might qualify for a pre-approved mortgage—but you won’t get the best interest rates or lowest down-payments.
The terms of your pre-approved mortgage will ultimately reflect the bank’s perceived risk in lending to you. The higher your credit score, the lower the risk.
Establishing good credit is key in not only being able to get a pre-approved mortgage, but getting the terms you want.
There are simple and relatively quick things you can do to improve your credit score, and banks will often offer advice in this area if your credit score is too low.
3. Demonstrate Your Assets
The process of buying a home includes a down payment and closing costs. In order to maximize your chances of securing a pre-approved mortgage, be open and clear with the bank about your assets and investment options.
Demonstrate in no uncertain terms that you have the funds to make a down-payment and close the deal. If you’re not sure what kind of down payment you can afford, it’s time to take a close look at your own books.
If you work with a financial planner, he or she may be useful in this respect.
4. Prove your Identity
Obviously, banks will need standard proof of identification in order to run background checks and view credit reports. Be prepared to show your driver’s license, social security number, and any other identification the bank requests. If you err on the side of caution and bring more documentation than necessary, you’ll prevent delays in the pre-approved mortgage process.
5. Consult the bank first
Your appointment for a pre-approved mortgage is not the best time to learn the basic requirements of pre-approval, and some banks have different requirements than others.
A preliminary phone call or visit to the bank will help clarify the bank’s expectations and requirements. That way, when the day of the appointment comes, you’ll have your ducks in row.
Banks appreciate it when clients meet requirements in a concise and professional way. This won’t compensate for a low credit score or lack of verifiable income, but it will certain increase your chances of securing a pre-approved mortgage.
If you’re seeking a pre-approved mortgage, success is all about seeing things from the bank’s point of view.
Solid income, sufficient assets, and a high credit score are the three most important factors. If you have these, it’s only a matter of meticulous documentation.
Don’t expect the bank to take your word for anything. Be precise in your documentation, and you’ll be receiving the good news before you know it.
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