How to Prepare For A Mortgage Preapproval

A mortgage preapproval can save a home buyer time.

Obtaining a mortgage preapproval may help a home buyer choose which house to buy, since they will know how much a lender will finance for the purchase. Finding out what information the lender needs for the preapproval can help to relieve the home buyer's anxiety, since it will be one less thing for him to worry about during the home buying process. Once the home-buyer gathers all of the mortgage preapproval information to give to the lender, he can then focus on finding the right home.

Things You'll Need

• Two file folders
• Last two years of tax returns
• Current employment pay stub
• Last three bank account statements
• Investment or retirement account statement
• Creditor statements
• Mortgage application

Instructions

1. Make copies of your last two years of income tax returns to start preparing for a mortgage preapproval. If you receive a pay stub from your job, find the most recent one and make sure it shows your current annual earnings. If you are going to apply for a mortgage with your spouse, find that pay stub as well. Make a copy of the pay stubs and put them in a file folder along with the copies of your tax returns.

2. Locate your last three bank account statements and make a copy of each page. If you use more than one bank for checking and savings, make copies of each bank's last three account statements. Place all these copies in the same folder as your income tax returns and pay stubs.

3. Copy the paper statement of any investment accounts you may have, or print a copy of the online statement that shows your account balance. Also copy the statements from a retirement account if you or your spouse has one. Place these copies in the same folder as your income tax returns, pay stubs and bank accounts.

4. Find the latest statement from each of your creditors. You do not have to make a copy of any creditor statements, but you will need to have the account numbers and current balance information when you fill out the mortgage application. Place the creditor statements in a separate folder, since the lender may not require the actual statement to give you a preapproval. If the lender does need to see the creditor statements, you will have them ready to copy.

5. Contact the lender you are going to apply with for a preapproval and ask to speak with a mortgage loan officer. Tell the loan officer that you are in the process of looking for a new home and would like some information about the preapproval process. Ask the lender what the current interest rate is for the type of mortgage you want and get a rough estimate on the closing costs and processing fees.

6. Ask the loan officer to send you a mortgage application package. Complete the application and put it in the file folder that contains the copies of your income taxes, pay stubs and bank and investment account statements. Keep the folder in a safe place until you are ready to submit your application for a preapproval.

Tips & Warnings

• If you are not going to apply for a mortgage preapproval for a few months, try to pay down your credit card balances to help raise your credit score.

• Apply for a preapproval with more than one lender to compare loan packages.

• Monitor mortgage interest rates after receiving a preapproval if a rate increase will affect the amount of your home purchase.

References

• Federal Reserve: 5 Tips for Shopping for a Mortgage
• Realtor.com: Find a Mortgage Lender

Resources

• Read this Article in Spanish
• The Federal Reserve Board: Looking for the Best Mortgage