Understanding the Pre-Approval Process

As your go-to mortgage company in Phoenix, our goal at Primary Residential Mortgage is to make every part of the mortgage application simpler and easier for you. One of the top tips we offer clients looking to ensure themselves the best possible mortgage loan: Get pre-approved.

What does pre-approval mean, and why is it important? Let’s find out.

What is Pre-Approval?

Simply, pre-approval is an expression of confidence from your lender that you’ll be able to meet the financial requirements of a loan – the down payment, monthly payments and any mortgage insurance involved.

This process is completed through a thorough investigation of your financial profile, including a comprehensive credit check and a detailed look at your income and monthly expenses. This is different from pre-qualification, which is a much less official procedure and really functions as little more than a glorified meet-and-greet in some cases. Once you’ve been pre-approved for a loan, it’s very uncommon for your final approval to be denied.

Preparing for Pre-Approval

The first step in preparing for a pre-approval check is getting your finances in order. Check to make sure your credit score is where you need it to be – there are online tools that make it possible to check at least two of your credit scores for free and without raising them every time you check. An advanced understanding of your finances will help you understand which kinds of loans and mortgage rates you can qualify for.

Documentation Needed

There are a few specific pieces of documentation you’ll need to bring to the lender during the pre-approval process:

• Income information: You’ll be required to present pay stubs, tax returns and W-2 forms from each of the previous two years, plus any other documentation indicating other sources of income.
• Personal information: You’ll need at least one form of official identification, plus your Social Security information for the credit check. You don’t have to bring your own credit information – the lender will run this check on their own.
• Asset information: This is for assets you may claim that don’t include income, such as savings, investments or any personal gifts or loans from friends or family.

Want to learn more about the pre-approval process, or any of our mortgage services? The brokers at Primary Residential Mortgage are waiting to assist you.

The views and opinions expressed are my own and do not necessarily represent the official policy or position of Primary Residential Mortgage, Inc