Mortgages can seem daunting. Pre-approval, credit scores, lenders and qualifying are all terms you hear that add to the stress of buying a home. The qualifications for a mortgage vary depending on the lender and the type of mortgage you want to get.
Generally, you will have to meet certain criteria for any lender before you can get approved for a loan. We’ve come up with a few things to consider that may help with the approval of your mortgage.
Proof of Income
You will need your W-2s from the past two years and recent pay stubs that show income as well as proof of your income-to-date. You will also need to include proof of any additional income such as alimony or bonuses and the two most recent years’ tax returns. These items will be a part of your pre-approval.
Pre-Approval and Pre-Qualification
A mortgage pre-qualification helps the buyer know an idea of the amount they can get a home loan for, but a pre-approval is a better choice because the lender will check the buyer’s credit and verify the documentation to approve a specific amount the buyer can work with.
Lenders hope you’ll put down 20% of the cost of your home when you buy a house, however, many people put down far less. Most conventional lenders require a minimum 5% down payment but some allow as little as 3% down if you’re a highly qualified borrower.
FHA loans are available with a down payment as low as 3.5% and VA loans don’t require any down payment at all unless the property is worth less than the price you’re paying for it.
If you put less than 20% down on a home with a conventional mortgage, you’ll have to pay private mortgage insurance (PMI). You will have to pay PMI until you owe less […]