Mortgage Pre approval Process USA - Best Steps for Loan Pre-approval

What is a Mortgage Pre-Approval?

Mortgage pre-approval is a promise from the lender that qualified to borrow up to a certain amount of money before you apply for a loan. With this meaningful promise, you'll be likely to get the home you deserve due to your creditworthiness.

Step for Mortgage pre-approval: The process of mortgage pre-approval process usa are follows as:

Pre-Qualification or Approval?

Mortgage pre-approval involves filling out a mortgage application and providing your Social Security number so that a lender can do a hard credit check.

Mortgage pre-approval letters are typically valid for 60 to 90 days at which point they will need to be renewed with updated financial documents. In the meantime, you have the opportunity to address any issues that may be revealed in your credit report, such as a disputed account.

The Pre-Approval Process

For fisrt time buyers, you’ll fill out a mortgage application. You’ll include your identifying information, as well as your Social Security number to pull your credit. 

Mortgage credit checks count as a hard inquiry on your credit reports, which may impact your credit score, but if you’re shopping multiple lenders in a short timeframe (usually 45 days for newer FICO scoring models) the combined credit checks count as a single inquiry.

If you’re pre-approved for a mortgage, your loan file will eventually transfer to a loan underwriter who will verify your documentation against your mortgage application.

Documentation Needs

After submitting your mortgage application, you’ll need to gather a number of documents to verify your information. Preparation and organization on your end will help the process go more smoothly. Here’s a list of documents you need to present in order to be pre-approved or to secure final loan approval before closing:

• 60 days of bank statements

• 30 days of paystubs

• W-2 tax returns from the previous two years

• Schedule K-1 (Form 1065) for self-employed borrowers

• income tax returns

• asset account statements (retirement savings, stocks, bonds, mutual funds, etc.)

• driver’s license or U.S. passport

• divorce papers (to use alimony or child support as qualifying income)

• gift letter (if funding your down payment with a financial gift from a relative)

Factors Impacting Pre-Approval

If you want to maximize your chances of getting a mortgage pre-approval, you need to know which factors lenders evaluate in your financial profile. They include your:

Self-Employed Borrowers

If you’re a self-employed borrower, you might be asked to provide additional documents to show a consistent income and work history of at least two years.

The Pre-Approval Letter?

Your lender will provide you with a pre-approval letter on official letterhead. Pre-approval letters typically include the purchase price, loan program, interest rate, loan amount, down payment amount, expiration date, and the property address. The letter is submitted with your offer; some sellers might also request to see your bank and asset statements.

In today's competitive market, this is the single most important first step on the road to home ownership. Be sure you work with a lender that does it the right way!