Before you start the pre-approval process for a mortgage loan, you should get some things in order. Here is a checklist of steps you can take to make the process easier:
- Review your credit report for errors.
- See if there are any easy actions you can take to improve your score.
- Don’t do anything that will harm your credit score.
- Gather the last three months of bank statements, last two W2 forms, as well as a month’s worth of pay stubs.
- If you’re self-employed, locate your last two years of tax returns.
- Make sure your down payment money and closing cost money will be sitting in your bank account for at least 60 days.
- If you’ve been renting with a private landlord, put together the last 12 months of canceled checks, showing that you’ve been on time each month with your rent payments.
The first step is to make sure that your middle credit score is 620 or higher. If not, you will need to work on improving this.
There may be some simple things you can fix on your credit report. If so, work with a professional who has Rapid Rescore and start repairing your credit score now.
It is important that you don’t do anything to hurt your credit score. Talk to a RML loan originator about the details, but here are some basic guidelines:
- Don’t apply for new credit.
- Don’t cancel any current cards.
- Don’t make any major purchases.
- Don’t ask a creditor to lower your limit.
If you apply for a mortgage loan with an excellent credit score and it goes down during the process, you may no longer qualify for the loan. As long as you understand what lenders are looking for, you will know what you should avoid doing.
Gather all the documents now that you will need to get pre-approved or approved for your loan. You will need to prove your income and assets with bank statements, W2 forms and pay stubs or tax returns if self-employed.
Put those together now as you may discover you are missing a few documents. They are easy to get, but may take a couple of weeks.
It’s best if you can put your down payment money in your bank account and let it sit there for 60 days. If you are transferring from another account, you don’t need to worry about this as you can always submit documents verifying the other account.
This comes in handy if the money is coming from another source or if it is hard to verify. As long as you have it in your bank account for at least 60 days, lenders consider that to be yours.
If you are renting from a private landlord, start collecting all your canceled checks for the last 12 months. If you don’t have them, you may need to order them from the bank.
If you know you plan to get a home in the near future, there are things you can do to prepare. Some documents might take weeks to gather, so starting early is always a good