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.