How to Get Pre-Approved for a Loan to Buy a Foreclosed House

To get a mortgage on a house, a borrower has to be pre-approved by the lender.

The process of mortgage pre-approval is the same regardless of the type of property that a borrower wants to buy, be it foreclosed or not. The lender will require some basic documentation to prove the borrower's willingness and ability to repay the debt. Once the borrower has been pre-approved, the lender can write a letter stating the the borrower has official pre-approval from the bank and this letter can be added to an offer on the foreclosed residence to increase the borrower's chances of procuring a final contract on the property.

Difficulty:

Moderately Easy

Instructions

Things You'll Need

• 2 months pay stubs
• 2 months bank statements
• 2 years tax returns
• Mortgage loan application

1. Fill out a mortgage loan application called a "Uniform Residential Loan Application" with a mortgage lender. Information included on the application will be your full legal name, Social Security number, date of birth and address. You will also have to provide two years residence and employment history. Assets and liabilities will have to be itemized on the application as well.

2. Provide the lender with two months pay stubs, two months bank statements (all pages) and two years tax returns to verify the information listed on the application. Additional documentation may apply, depending upon your situation, especially if you pay or receive child support, alimony and/or retirement pay.

3. Give the lender permission to check your credit and process your application. Once he has done so, you will be notified of your pre-approval, or denial, depending upon the results of your application.

Tips & Warnings

• Check your credit prior to application through a free online service, such as AnnualCreditReport.com. Check your report for errors and report any immediately through the website. In addition, review the report to see if there is any way to increase your credit score quickly. The higher your credit score, the more likely you will receive pre-approval on your mortgage application.

• Pre-approval does not mean that your loan will close. It means that you meet the requirements for approval. Full approval does not come until after a contract has been made, an appraisal has been completed and the underwriter has approved the loan. You could still be denied before closing, however, it is less likely due to the fact that you are pre-approved.

References

• Freddie Mac: Applying for a Mortgage
• The Federal Reserve Board: Home Mortgages

Resources

• E-Fannie Mae: Uniform Residential Loan Application
• Annual Credit Report