Technology has changed the way consumers buy products, even when it comes to homebuying. The majority of prospective buyers start their housing search online; buyers can now start the home financing process online, as well. Reaching your mortgage goals starts with completing a pre-approval or loan application.
Whether you are completing a request for a pre-approval, which requires a substantially smaller amount of information, or submitting a full loan application, here are a few things you should be prepared to provide:
You and your co-borrower, if you have one, will need provide your full legal name, current address, previous address (if you have lived at your current address for less than two years), phone number, marital status, Social Security number, and date of birth. Your lender will use this information to run and verify your credit report.
Income is a large component in determining the amount of money you are eligible to borrow. A loan application will ask for details regarding your income, including base income, overtime, bonuses, and commissions. You will also need to divulge if you receive any profits from dividends, investment properties or other sources.
You will also need to list details of your current employment, including the name, address and phone number of your employer, your position or job title, and dates of employment.
Assets & Liabilities
You will need to list out what you own and what you owe. Though lenders require proof of employment and income to show you will be able to make your monthly mortgage payments, they also like to see assets that are held in cash or can easily be converted into cash (liquid assets) as well as other valuable items borrowers own (non-liquid assets).
Liquid assets include: checking and savings accounts, stocks, bonds, and life insurance policies; whereas non-liquid assets include: real estate, cars and retirement plans.
Your liabilities are your current financial obligations, also known as “bills”. Your lender will compare these obligations to your income to determine how much new debt you can handle. Liabilities include mortgages, car payments, credit cards, lines of credit, alimony, child support, etc.
Details of the Home Purchase (If Applicable)
Perhaps you already know the price of the home you are wishing to purchase, the type of loan you want to use, the down payment amount you have set aside, etc. You can include this in your pre-approval request or loan application, though it is not required. It is suggested to get a pre-approval or loan commitment prior to shopping for a home.
Looking for more information regarding homebuying? Our Mortgage 101 Handbook is a knowledgeable go-to guide for first-time and repeat homebuyers.