We’ve talked about how vital pre-approval is. Now, let’s talk about the actual process of getting pre-approved. Many people get intimidated by this part of the journey, but you shouldn’t worry.

We’ll give you an in-depth explanation of what to expect when going through the pre-approval process.

What You Will Need 

You’ll need to bring a couple of documents before seeing a lender. That includes: 

• Your Social Security Number 
• Your Driver’s License 
• Your Pay Stubs 
• Your W-2 Documents 

If you’re applying with your partner, make sure they have these documents at hand as well.

If you’re self-employed, lenders will look at your federal tax returns and determine your qualification for pre-approval based on your net income. 

They will also look at your income based on two years’ federal tax returns and average your income between those two years. 

What the Lender Will Look At 

Your Debt to Income 

Lenders will be looking at how much you own compared to how much you make. That’s also known as your debt-to-income ratio. 

Student debt is one of the most significant debt collections that may hinder your chance of getting a home. Many people meet the requirements of the pre-approval process, but their student debt often needs to be lowered for them to get approved.

You’ll want to take care of that before you apply for pre-approval.

Your Credit Score 

Your credit score is critical to the pre-approval process. The ideal credit score should be around 700 or higher, but there are programs for those with credit scores ranging in the 600s.

Generally, you want to maintain a credit score above 700 to ensure pre-approval.

Some lenders will look at your credit score from the three major credit bureaus, while others may only look at your credit score from one bureau. 

Your Employment History and Income

The primary reason why you’ll need your W-2 is that they need proof of employment. They’ll look at two years of work history, pay stubs from the previous 30 days, and 60 days of your bank statements. 

They’ll use this information to determine whether or not you’ll be able to pay the lender back and what amount you’ll get pre-approved for.

Your Partners’ Records 

Suppose you’re buying a home with your significant other and putting them on the pre-approval application. In that case, they will look at and your records. That means you and your partner should have great credit scores and excellent sources of income.

The lender will look at your and your partner’s median credit score. 

Getting a Pre-Approval Letter 

If you pass through the lender’s qualification process, then congratulations! You’ve been pre-approved.

But now you’re probably wondering what to do with this pre-approval letter. And the answer is simple. You start searching for a home with a Realtor® you can trust.

And when you find a home you like, you’ll submit an offer. It will include your pre-approval letter to inform the seller that your bid is serious and that you can afford the home.

The Benefits of Getting Pre-Approved Outweighs Any Risk 

The pre-approval process might seem intimidating, but it is a vital part of home buying. 

You generally only want to search for a home after getting pre-approved.

And while it doesn’t guarantee a mortgage, having a pre-approval letter from your lender makes it easier for the lender to process your mortgage application.