You’ve been searching online for the right home, cruising through neighborhoods looking for the “that’s it!” house. You’ve got to have one thing in hand before the fun begins: your preapproval letter.
Pre-qualified or Pre-approved?
Mortgage terminology can be confusing at times. One important milestone to becoming a serious buyer is fully understanding the difference between being pre-qualified and pre-approved.
Prequalifying means you’ve been initially screened by a lender. Usually, you will submit some basic information, and the lender will provide a rough estimate of what you might be able to afford. On the other hand, a pre-approval takes the preliminary loan process a step further. In most instances, you'll be asked to provide many of the same documents that will be required to complete the actual loan process, including tax returns, w2's, bank statements to show where the down payment monies will come from and employment verification. With a preapproval letter from your lender, real estate agents and sellers will know you are a serious buyer.
This letter can be shown to sellers when bidding on a property and proves you already have backing and the ability to go through with the sale, which makes you a much more attractive buyer. By going through the Preapproval process it also may allow for a quicker closing since the mortgage company would have most of the documents needed to get your loan through underwriting. If you have any questions on the process or would like to get Preapproved please feel free to call.
What documents will you need?
- Recent bank statements and any investment accounts. (To show where the down payment monies will be coming from.)
- Employment information, as well as recent pay stubs, W-2’s and tax returns for the last two years.
- In some cases other documents will be required but this is on a case by case basis.
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14 Main Street Suite 201, Madison, NJ 07940