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Pre-Approval Cheat Sheet

Pre-Approval Cheat Sheet

Before you get to the fun of house touring, a prospective home buyer needs to be pre-approved and fully understand what the pre-approval process entails.

"Pre-approval is more involved than just making an appointment," says Ron Croushore, CEO of Berkshire Hathaway HomeServices The Preferred Realty. "The lender needs to gather all of the required information in order to offer you a loan, and your credit report will need to be checked." At the time of the appointment, you will need to bring certain documents with you to verify your identity and assets, adds Croushore.

These documents include:

  • A most recent W-2 (or entire tax form if self-employed)
  • A copy of a recent bank statement (including any money market or savings accounts)
  • Proof of IRAs, retirement accounts, stocks or mutual funds
  • Your driver's license
  • A recent paystub from work
  • An application fee (depending on the lender--be sure to ask about this prior to your appointment)
  • If the bank likes what it sees at the end of this process, you'll receive your good faith estimate (GFE) -- a document telling you the likely terms you'll receive including the interest rate, loan type and closing costs.


"From there, you will be able to tell what price range of homes to focus your time and energy on. It will also prevent you from getting your hopes set too high," says Croushore.

Remember: just because you are pre-approved does not mean you are guaranteed to receive a loan from that lender. The actual loan is granted after the bank conducts an appraisal to make sure you aren't paying more than the house's value. This prevents you from over-paying and protects the bank against any buyers who may default on the loan in the future.

 

 

This post is sponsored by PA Preferred Mortgage:

Pennsylvania Preferred Mortgage is a full service mortgage banker and is a member of the Prosperity Home Mortgage, LLC family. Specializing in residential and refinance loans, Pennsylvania Preferred Mortgage offers a wide range of mortgage products, including fixed and adjustable rate mortgages, jumbo loans, Federal Housing Administration (FHA) and Veterans Affairs (VA) loans, and renovation financing. Learn more at www.papreferredmortgage.com.