• Tim Walsh

How to Get a Mortgage Pre-Approval

Are you thinking about buying a home? Before you do anything else, get pre-approved for a mortgage! Follow these steps to help you get a loan to purchase a home.

What is a Mortgage?

A mortgage is technically a signed document to a lender (such as a bank) that says you will pay them back for the money they have loaned you to purchase a home. In the event that you do not pay them back as you have you said you would, the bank can take over your home and sell it to make the money back. However, in common speak, we typically use the term mortgage to simply designate a loan used to purchase a home and we say that lenders give people mortgages to purchase homes. So if a mortgage is a loan used to buy a home, how do you get one? In order to get a mortgage, you must first get pre-approved for a mortgage. A mortgage pre-approval is a document from a bank that states the amount of money they are willing to give you to buy a home. The mortgage pre-approval takes into a number of factors that I will discuss in the following segments, but most importantly is that the bank has vetted you as a buyer and you are likely to get the mortgage barring any unforeseen changes such as losing a job. In some cases you may get a mortgage pre-qualification, but this is much less concrete than a mortgage pre-approval, and you may not obtain the mortgage in the end if you only have a pre-qualification.

Work With a Mortgage Broker

A mortgage broker is a professional whose sole job is to help prospective homebuyers obtain mortgages for the most money and best value. You may choose to work with a lender that is a bank, which will have their own internal mortgage division. Bank's do provide strong mortgages, but often have higher rates and usually charge a fee for the mortgage pre-approval. There are several mortgage brokers that work for mortgage companies that shop around for the loans with the lowest interest rates to get you the best deal. Moreover, these companies usually do not charge fees for the mortgage pre-approval. No matter who you choose to work with, you should get quotes from at least 3 different lenders to assure that you get the best deal! Once you have a mortgage broker, you are ready to get pre-approved!

5 Pieces of Documentation

Once you have a mortgage broker, you will need at least 5 pieces of documentation in order to get the mortgage pre-approval. In some cases you may need other documents, but if so, your mortgage broker will advise you on what you need.

1. Proof of Income

You will need to prove how much money you make by providing at least your last 2 years of W2's and your last 2 years of tax returns. You may also be required to prove other sources of income such as alimony or bonuses.

2. Proof of Assets

In many cases, you will have to pay some down payment for the home you purchase and will have to pay closing costs when you purchase a home. Therefore, you will need to prove that you have the money to make the down payment and pay the closing costs. This proof will usually come in the form of a bank statement. It is important you do not make major purchases prior to closing on your home because the lender will continue to monitor your assets up until 3 days before closing.

3. Good Credit

To show your lender that you consistently pay your debts and pay your bills you must have a good credit score. Typically your credit score must be at least 620 for most mortgage programs. Be sure to read my blog on how to improve your credit score.

4. Employment Verification

Lenders will contact your employer to assure that you work where you say you work and to further provide proof that you are making the salary you say you are making. In many cases, people have received raises from their previous W2 or tax return, so it is crucial that the lender verify this information with the employer. If you are self-employed you will have to provide extra document to prove your employment and income.

5. Other Documentation

Finally, you will have to provide some other pieces of documentation such as your license and social security number in order for the lender to pull a full credit report. Depending on your specific case, your lender may ask you to provide other documents, so bear in mind this list is not exhaustive.

Be sure to check out this video and more on the Walsh Real Estate YouTube Channel! Be sure to SUBSCRIBE, so you never miss a video!

Tim Walsh, REALTOR® is a licensed (#9557151) Massachusetts real estate agent with Century 21 The Real Estate Group. Tim primarily works in Central Massachusetts including the following towns: Milford, Hopedale, Mendon, Upton, Medway, Bellingham, Hopkinton, Holliston, Franklin, Uxbridge, Northbridge, and Blackstone. If you have any questions or need help buying, selling, or investing in real estate, call (508-494-9634) or email ( Tim today!

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