Five Things You Need to be Pre-approved for a Mortgage

A mortgage pre-approval means that you’re able to back up an offer with financing, which puts you ahead of the game.

If you submit a bid before meeting with our loan experts, a seller might reject your offer—even if it’s a reasonable one—because you don’t have a financing option in place. And as a result, you could miss out on the perfect property.

This might seem a bit unfair, but put yourself in their shoes.

If you had to thumb through multiple offers and choose between a pre-approved buyer and a non-pre-approved buyer, which one would you pick? In most cases, you’d go with the buyer who’s already met with a lender.

With that being said, don’t let your dream home slip through your fingers. Getting pre-approved for a mortgage with Blue Spot Home Loans is a quick and simple process. Here’s what we need from you to get started.

1. Proof of Identify

We must verify your identity and make sure you are who you say you are.

Be prepared to provide a photo ID, such as a copy of your driver’s license, passport, military ID, or other state-approved identification.

Since your Social Security number also confirms your identity, we’ll need this information, too.

Once you provide us with an authorization, we’ll use this number to pull your credit report, as well as request transcripts of your tax returns from the Internal Revenue Service.

2. Proof of income

Your income plays a major role in the pre-approval process because it’s used to estimate how much you’re able to borrow.

You’ll state your income on the home loan application, but we must confirm that your monthly income is actually enough to support a mortgage payment. So, we’ll need complete copies of your tax returns from the previous two years, as well as permission to verify your income with the IRS.

3. Proof of assets

In addition to documenting that you have enough income to manage your mortgage payment, you also need sufficient cash or assets to cover mortgage-related expenses. This includes your down payment and closing costs.

Your mortgage program determines the amount of your down payment. Some programs require as little as 3% down, or you may need between 5% and 10% down. We need the source of these funds, so be prepared to submit statements for your bank accounts and other assets (retirement, investments, life insurance, etc.).

If you don’t have enough in reserves, we’ll need an explanation of how you’ll cover these expenses. And if you’re using gift funds from a relative, you’ll have to provide the name of the donor and the amount of the gift. The donor must also submit a written statement confirming that funds are a gift, and not a loan.

4. Acceptable credit history

You don’t need a high credit score to get a mortgage, but your credit score must be high enough to meet the minimum requirement for your specific loan program.

Typically, you only need a credit score of 620 for a conventional loan, and a credit score of 580 for an FHA loan*.

When we pull your credit report, we’ll not only look at your credit score, but also your recent credit activity. A recent history of late payments, judgments, and collections could jeopardize your chances of getting a home loan. So it’s important to clean up your credit beforehand. This includes paying bills on time, disputing errors on your credit report, and paying off certain collection accounts and judgments.

A higher score can result in a smoother pre-approval process, and help you qualify for the best current mortgage rates on a 30-year fixed mortgage or other product.

5. Employment verification

Although your tax return provides information on your income, we must confirm that you’re currently employed and that your income hasn’t changed significantly since filing your taxes.

If you’re an employee, you’ll submit your most recent paystubs and an employment verification letter. This is when your employer confirms your employment status with the company and your current salary.

If you’re self-employed, you may need to submit a year-to-date profit and loss statement.

Bottom Line

You’re excited to get a mortgage and we’re excited to make your dream come true. To begin your home ownership journey or to learn about current refinance rates, contact the loan experts at Blue Spot Home Loans today. Call (800) 976-5608 or fill out the contact form.

*Cherry Creek Mortgage Company is not endorsed by, nor acting on behalf of or at the direction of the U.S. Department of Housing and Urban Development, Federal Housing Administration, U.S. Department of Agriculture, Veterans Administration or the Federal Government.