Mortgage 101 - Pre Approval and Documentation

In this Mortgage 101 series, Milynda Hallermann, with America’s Choice Home Loans, and Mitchell Bonte, with Cedar Frame Real Estate, will aim to demystify the financial aspects of homeownership. We will delve into mortgage terms, pre approval and documentation, home buyer credit scores, online lenders, and much more.

Preapproval vs Pre Qualification

Mitchell: There’s so much confusion regarding the difference between getting pre-approved for a loan and getting prequalified for a loan. Would you mind providing us with some clarity? 

Milynda: There is actually a big difference between preapproval and pre-qualification and in this very competitive housing market for buyers, that can make the difference between getting the offer accepted and not getting it accepted. Pre-approval is a more rigorous process where your lender is verifying your income, verifying through credit documents and is able to confirm you as a solid buyer. The preapproval letter is going to have more weight than the pre-qualification letter, which is a more cursory process that doesn’t provide the lender the confidence that the preapproval does. An experienced seller’s agent will know the difference between a preapproval and pre-qualification and will weigh the pre-approval much stronger than a basic pre-qualification letter.

What Documents To Get Pre-Approved 

Mitchell: A lot of people get overwhelmed when they think about the paperwork involved with getting pre-approved. What are some documents that they can get ready now so that they can speed up the pre-approval process with you? 

Milynda: A good pre-approval standard is we need a copy of your ID. If you are not a citizen, we need a copy of your visa or your green card, last two months of pay stubs, last two years W-2s, last two months of bank account statements for any account that you would use for down payment or closing costs. If you’re self-employed we will need an ID, bank statements and the last two years of your tax returns, the complete returns. Those are all the documents that we need to get your preapproval started.