You’ve read here before about the important distinction
between a preapproval and a prequalification and why the distinction is
important. First, when you make an offer on a home the sellers want to see how
serious you are about the process and whether or not you’ve even talked to a
mortgage company. Second, with a preapproval you can shop for a home with the
knowledge that all you need next to do is find a property and provide a copy of
your signed sales contract to your lender. Beyond that, here are three things
you need to know about mortgage preapprovals.
prepared to provide your fair share of paperwork. When a lender reviews an
application for a preapproval the lender realizes there is no property as of
yet but documents the loan application is if there were. Your credit report is
pulled and credit scores examined. You’ll be asked to provide your two years
most recent W2 forms along with recent pay check stubs covering a 30 day
period. If you’re self-employed, you’ll need copies of your last two years of
both personal and federal income tax returns. Bank statements showing
sufficient funds for a down payment and closing costs must be provided.
of documentation, when a lender performs a preapproval the lender does so based
upon the most recent documentation you have. If you’re asked to provide pay
stubs and you find copies of some from a few months ago, that won’t work. They
need to be within a 30 day period. So too do your bank statements need to be
within that time frame. If you’re shopping for a home and it’s been three
months since your preapproval was initially performed, while your preapproval
letter may be okay for the sellers the lender will still update your file once
you have identified a property.
Don’t Change. Once
your preapproval is issued it’s important that you don’t change anything. Don’t
rent another apartment. Don’t change jobs even if the new job pays you more.
Switching employers means the mortgage company needs new pay check stubs and
getting those new stubs covering a 30 day period can be a challenge as
employers typically delay the first pay check. If you’re thinking of making any
important changes while you’re shopping for a home, speak directly with your
loan officer first.