A mortgage pre-approval is a written statement from a lender that signifies how much money you can borrow to purchase a home. This document is based on an analysis of your creditworthiness and the value of the property you’re buying and will likely include an estimate of your monthly mortgage payment. A pre-approval letter is required when you make an offer on a home, so it’s a good idea to do one before you start your home search.
1. Strengthen Your Credit Score
If you want to get pre-approved for a mortgage, you’ll need a good credit score. Lenders will consider this score to determine whether or not you’re a good candidate for a loan and the interest rate they’re willing to offer you. The minimum credit score for most loans is within the mid 600, but you’ll likely qualify for a better interest rate if your score is higher.
2. Save for a Down Payment
Before you get pre-approved for a mortgage, you’ll also need to have some money saved up for the down payment on your loan. In general, most lenders require at least 5 percent of the total cost of your property as a down payment, but this amount can vary depending on the type of loan you’re applying for. A safer bet is to save up to 20 percent for the down payment.
3. Gather Your Documents
To begin the pre-approval process, you’ll want to gather several important documents, including your most recent pay stubs, W2 forms, tax returns from the last two years, and proof of any assets or investments that you may have. Your lender will use this information to verify your income and assets and get an idea of your financial situation.
4. Choose a Mortgage Lender
Once you have all of your documentation in order, it’s time to choose a mortgage lender. You can shop around for the best interest rates and terms, but it’s crucial to find a lender that you feel comfortable working with. Before settling on a lender, be sure to compare fees, points, and other costs associated with each loan.
Need Help Buying a Home in South Carolina?
If you’re having trouble getting preapproved for a mortgage, there are a number of programs available to help you buy a home. If you’re interested in buying a home in South Carolina, we’d love to help you find a home that fits your budget and needs. Call us today at (864) 497-7107.