Documentation for prequalification may include:
- Social Security Number
- Date(s) of Birth
- Verification of your income (and perhaps your spouse’s or whomever you will be purchasing the home with)
- Verification of your debts (credit cards, car loans, alimony, etc). Your lender will obtain or verify this information via a credit report.
- Determining how much you have for a down payment which may require proof of funds.
Based on this, the lender will “pre-qualify” or “pre-approve” you for a certain loan amount and property purchase amount, with the down payment making up the difference. Then the house search can begin with this budget in mind.
Pre-Approval and Approval
For approval, your lender will need to obtain additional information from you for their underwriting department to finalize the loan. In order to take this step, the bank will need additional documentation such as:
- Copies of your Federal tax forms for the last two years (or more)
- Copies of your most recent paystubs
- Landlord information if you are renting
- Verbal verification of employment from your employer
- Explanation for anything on your credit report that causes concern
- Bank account information including documentation of any deposits
- Verification of funds in any asset accounts
- Verification of funds transfer when selling a house and purchasing another
While this may sound daunting, it isn’t if you are prepared and don’t pack away all your documents! When you get prequalified with the lender, I suggest receiving a list of everything you may need to provide and make sure you have these items in hand. However, there may be additional documents or information that you are asked for by the underwriter. This is a normal part of the process and there is no need to be alarmed if additional documentation is asked for.