Preapproval is the process a potential home buyer goes through with a lender to determine the amount of home they can purchase. There are many advantages to going through this process prior to looking for a home. Below a few of these points are briefly discussed including what documents you will need to get preapproved.
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Why is it important to get pre approved before looking for a home?
- Look for the right home
- Examine the homes you qualify
- Stronger bargaining & increased negotiating power
It does not make sense or a good use of time to look at houses you cannot afford. Nothing is worse than finding a dream home but coming to the realization you cannot afford the property. This process will allow you to set your parameters of homes to preview based on your preapproval.
Understanding which price point you qualify for will give you more time to focus on a smaller inventory of homes. By providing you this additional time, you can focus on which homes best meetsall your needs.
The seller of the home is going to be more interested in negotiating with you than other purchasers because you have been preapproved. They can also consider taking a lower price knowing you are already preapproved and possibly able to close the transaction sooner.
Documents you need to get preapproved:
Last 2 years of W-2’s
Last 30 days of Paystubs
Last 2 years of tax returns if you are self employed
Last 60 days of bank statements
Copy of Drivers License