What you need to gather for your a mortgage pre-approval
4 minute read
July 7, 2016


The process of applying for a mortgage can be daunting. It’s a complicated issue, with twists and turns and many opportunities to take a misstep. With so much to do, it can be hard to know where you should even start.

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If you’re just now starting this process, there’s one aspect that should be everyone’s first stop: mortgage pre-approval. Here’s how you should proceed with that crucial step – and why it’s so important in the first place.

Why Is Mortgage Pre-Approval Important?

If moving is considered one of the most stressful events in a person’s life, then buying a house could be the most panic-inducing. Whether you’re fighting with contractors or other buyers, it almost always tends to wear you out.

But there are things you can do to simplify the process. The first step? Mortgage pre-approval.

An often overlooked step – less than 10% of buyers get pre-approval – this process means a lender has verified that they will lend you a certain amount of money to buy a house. Even though this is the mundane part of buying, skipping it can leave you homeless. Some sellers and real estate agents don’t accept offers unless the buyer has pre-approval from a bank.

Getting pre-approval also lets you see how much money the bank is willing to lend you. Imagine finding a house you love only to discover that you can’t get a loan for the amount it’s selling for. Or you may find that you have some negative marks on your credit score that prohibit you from getting a loan with a low interest rate.

It’s important to take care of these issues before you start going on home tours and getting serious about settling down. If you’re self-employed or have another special circumstance, getting approved for a loan will take more time. Starting the pre-approval process will alert you to any issues the lenders might have (for example, that your net income is too low due to taking a lot of business deductions).

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In many ways, pre-approval is a win-win for the lender and the borrower. The lender ensures that they’re only giving loans to responsible, well-qualified candidates, and the borrower gets a clear sense of their financial situation before diving head first into a loan they can’t afford.

What You Need and Why

So the importance of pre-approval has been well-outlined, but what do you need to ensure you actually get pre-approved?

According to financial blogger Deacon Hayes of Well Kept Wallet, the following is what you need to get pre-approval:

  • 1-2 months’ worth of your most recent paystubs
  • 2 months of your most recent bank and investment statements
  • 2 years’ worth of tax returns, especially if there’s self-employment income or overtime income
  • Copies of your driver’s license(s)

Gathering most of these documents should be easy for most people. If you or your spouse are self-employed, lenders will generally want to see two year’s worth of self-employed tax returns, especially if the other spouse’s income will not qualify for a loan.

While the bank will most likely run a credit check on you, it may also help to check your own credit report before filing for pre-approval. You can find free versions of your credit report from all three credit bureaus at annualcreditreport.com where you can download them once a year at no cost.

Don’t let the prospect of starting the mortgage process scare you. Pre-approval exists to allow the lender and borrower to enter into a relationship that benefits both parties. Gather your documents, do your research and start confidently down the path to home ownership.

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