There’s no two ways around it; buying a home is an arduous and energy-draining exercise. Our best advice for those about to go through it is to ensure that you are ultra-prepared. If you have your house in order (bad pun, I know), it’ll help make the process SO much smoother. One of those steps is meriting a mortgage pre-approval, especially in writing. Here are some tips to getting pre-approval so you can browse homes confidently.
Have All-Important Information on Hand
The devil is in the details. A lender will want to assurance that their money’s in safe hands. Proof of income for two years (like a W-2), pay stubs that showcase your income, two years of tax returns, or proof of any additional income will go a long way to easing their minds. Be sure to compile as much as you can, keep your own copies, and show that you’re ready to take this step.
Demonstrate Proof of Assets
Just like the first point, borrowers need to provide proof that you can afford a down payment and closing costs (along with a cash reserve in the pocket). Bank statements, and any investment portfolio documentation will assist in this process. Keep in mind, many loan providers require mortgage insurance to accompany an application, while money from family/friends might also need a ‘gift letter’ to declare that funds are not a loan (just a cash infusion from the Bank of Mom & Dad!).
Have Good Credit
This is an integral hurdle to overcome, as loaners consider this as the currency to legitimize you and your spending habits, comparable to your income. Demonstrating an astute ability to pay off your credit card, or avoid debt, is a prime indicator that you, as a potential homebuyer, are worth backing. There’s no quick fix to this – you either have good credit or you don’t. If in the latter, co-signing with a trusted person like a parent is a viable option to pursue.
Get Employment Validation
Yet another criteria you’ll need to satisfy – that you have stable employment. A lender may likely call an employer to verify information. A letter of employment is also no harm to possess.
For the self-employed among us, you have some more paperwork to sift through. This can become as granular as the person’s business, its nature, location, demand for the product/service, its financial strength, and the ability to generate sufficient income to enable a lender to afford a mortgage. Our advice; leave no stone unturned here, so you don’t run into any surprises.
Lastly, you may require to disclose your credit report from your bank(s), a copy of your driver’s licence, your Social Insurance Number, as well as additional documentation – depending on your profile.
Bottom line, speaking with a lender about the financial aspect of homebuying is fundamental to figuring out where you are in the process, what else you might need to make your dream come true. We know a few trusted providers, if you’d like to get in touch with us!