How to Get Pre-Approved for a Mortgage and Why Does It Matter

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pre approval mortgage

Are you serious about buying your dream house? If your answer is yes, you must know that a pre-approval letter is a license to drive on the road to homeownership. However, a pre-approval letter is a document provided by a lender stating that he is willing to lend you a mortgage.

The lender will check your credit history, income status and other assets to see whether you qualify for a mortgage or not. If your documents, credit history and income status are up to date, you are ready to start purchasing your dream house. Here we will show you how to get a pre-approval mortgage Aurora and why does it matter.

Why it is vital to get pre-approved for a mortgage 

Getting pre-approved is the first and most important step of your home buying process. A pre-approval letter in your hand will represent you as a serious home buyer to the lender.

Getting a mortgage to buy your dream house is a time-consuming and overwhelming process.

Getting a mortgage pre-approved will give you a purchase price limit. It will let you find the best deals that suit your financial status.

A pre-approval letter will make you stay away from houses that are not in your budget. If your budget is $150000 to buy a new home, you might get depressed that you won’t get a deal on this budget.

But you do not have to depress because a pre-approval letter will allow you to get the deal if your budget is any number.

Steps to getting a pre-approval mortgage Aurora

Here we will show you some easy steps to get a pre-approval mortgage. Please have a look at them.

1.Check your good credit score

It is vital to maintain a good credit score to stand before reaching a lender. The lender will check your credit history before providing you with the pre-approval letter.

Your credit score must be at least 620. If your credit score is less than 620, it will become impossible to pre-approve.

On the other hand, if your credit score is more than 620, your chances of qualifying for better rates will increase. So always check your credit score before heading to a lender for pre-approval.

2.Lower down your debt-to-income ratio

The percentage of your gross monthly income considered to be debt-to-income ratio.

However, the lender will provide you with a pre-approval letter if the percentage of DTI is 36% or below.

3.Check your credit reports

Always check your credit report before applying for a pre-approval mortgage. If you find any issue in your credit report, try to resolve it because it will become uneasy to get a pre-approval letter.

4.Collect personal, income and account information

You have to gather your documents and personal information, including employment details, your address and social security number.

However, you also have to provide your income proof, investment and account information before applying for a pre-approval letter.

Documentations

Here are some essential documents you have to submit to the lender to get a pre-approval letter.

  • 30 days of Pay Stubs
  • 60 days of bank statement
  • Income Tax returns
  • Driving license or US passport
  • W-2 Tax returns
  • Schedule K1
  • The asset account statement, including mutual funds, bonds, retirement savings and stocks.

Wrapping up

We hope you get to know how to get a pre-approval mortgage Aurora and why you need the one. However, a pre-approval letter in your hand will represent you as a serious home buyer in front of the lender. Make sure to gather all the documents given above to get pre-approved for a mortgage.