Top 4 Things Lenders Need For Pre-Approval

8/8/16    3 min. read

Many lenders have tightened loan guidelines due to ever changing government requirements and restrictions on banks. Therefore, it is important to know what a home buyer needs to bring to a lender for a potential home loan preapproval.

Below we look at the top four items a home buyer needs to bring to the table to get pre-approved:

1. Income/Wage documents
   This is important. Lenders need to verify your income and calculate how much to potentially lend a home buyer all while staying within there requirements. Lenders also like a stable employment history of at least two years. This reduces the risk of the home buyer(s) defaulting on the mortgage.
    
   
2. A Down Payment
   In the housing boom some odd years ago, there were 100% financing options available. That, of course, contributed to some of the troubles during that housing bubble because home buyers were over extended too easily. These days you will need to bring some form of down payment to the table. This can range anywhere from 5-20% down depending on the loan amount.

3.     Solid Reserves/Savings
Most lenders will be looking at how much money you have in the form of savings accounts or other assets. This helps reduce the risk to the lender in writing you a preapproval. The lender will verify this by asking for bank statements with a bank employee stamping the document.
 
4.    Solid credit score(s)
While there are some options for those with less than stellar credit scores, this is becoming far and few. Lenders are becoming more and more picky about a home buyer having at least average or higher credit scores. It is wise to have your credit report(s) pulled before you apply for a mortgage to give you an idea of how your credit history and score(s) are.

Whether you are looking to purchase a home now or in the near future, it pays to speak with a reputable mortgage professional to learn more about the other requirements necessary to get your next home the right way.

-Jason Gelios REALTOR