Buying a Home - Pre-Approval

What is a Pre-Approval?

A pre-approval is defined as “a commitment from a lender to loan a certain amount of money to a buyer at a designated interest rate and for a specified period of time, thus giving the buyer an advantage in competing to purchase real estate or a home”.  The pre-approval is meant to take place before a buyer finds a specific home to purchase.

The Importance of a Pre-Approval

A pre-approval is important because it not only shows the seller that a buyer is in a financial position to purchase the home, but it also shows the seller that the buyer is serious about purchasing the home. Pre-approval also gives the buyer peace of mind in knowing that the home is something that the buyer can afford. Therefore, when a buyer submits a pre-approval letter along with an offer to purchase, it makes a seller feel more confident that the buyer can afford the home. It also puts the buyer in a better position should there be multiple offers on a particular home.

Documents Needed for a Pre-Approval

The following documents are needed to start and complete the pre-approval process:

  • Credit report (obtained by lender)
  • Tax returns for the past two years
  • W-2’s for the past two years
  • Most recent pay stubs
  • Savings and checking bank statements
  • Asset accounts statements
  • Proof of other income
  • Verification of current and previous residency
  • Employment history

Contact your lender or an Adashun Jones agent with any further questions on the pre-approval process.

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