We are in a hot seller’s market here in North Texas at the moment. That means we are seeing low days on market, multiple offers, and some listings even going for over asking price. For homebuyers, this means you need to be prepared to submit attractive offers quickly. The first step is to get pre-approved for a mortgage. I showed a Carrollton property just this weekend to an interested party that loved the home! Unfortunately, because they weren’t prepared with an updated pre-approval letter, they lost out on this beautiful home. Sellers want and expect to see pre-approval letters especially in this market, and many will not even look at an offer that does not have a pre-approval letter attached. So why is pre-approval so important? A pre-approval letter proves to sellers that you are a serious buyer that can obtain the financing required to purchase their home.
Buyers also benefit in many ways by consulting with a lender first. You’ll have the opportunity to discuss different loan options and budgets with the lender. The lender will check your credit and see if there are any problems that will need to be fixed. You can also learn the maximum amount you can borrow and help set your price range for your home search!
Be ready for your lender appointment. Here are 5 items you need to prepare to get pre-approved for a mortgage:
- Income – Lenders will need to see proof of income. Be prepared to produce W-2 wage statements, 1099’s if you’re a contract worker, paystubs, tax returns and/or proof of any additional income from alimony or bonuses from the past 2 years.
- Credit – Lenders are going to check your credit. Most require a minimum 620 FICO score to qualify for a conventional mortgage and 580 FICO score to qualify for FHA. The higher your score, the better the interest rate!
- Assets & Debts – Lender will want to see bank statements and investment account statements to prove you have the funds for down payment, closing costs and cash reserves. In addition to assets, lender also determines approval based on debt-to-income ratio. Know how much your monthly payments are for monthly rent, student loans, car payments, and credit cards.
- Employment – Lenders will want to verify your employment as they will only lend to borrowers with stable employment. In addition to paystubs, the lender will contact your employer to verify employment and salary.
- Identity & Other – Be prepared to produce driver’s license, ID, Social Security number, and anything else the lender requests for a smooth mortgage process.
Consulting with a lender before you start the homebuying process can save you a lot of time later. Start gathering the necessary paperwork before your appointment, and definitely before you go house hunting!
If you’re ready to buy a home this year, your first step is to get in touch with a lender and get pre-approved. Ask us for a recommendation, we work with lots of great mortgage companies and can put you in touch with someone that can help. Give us a call at (214) 449-1022 for any questions!