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How Buyers Can Be Preapproved for a Mortgage Bookmark and Share

Potential buyers who want to stand out from their competition should obtain a mortgage preapproval. Doing so indicates to sellers that buyers are serious about making an offer on a listing and can match the asking price.

But lenders don't preapprove every buyer. Certain requirements must be met.

Here are a few tips to help individuals increase the odds of being preapproved:

Pay debt

Every individual has to make an effort to pay off debt while still tackling monthly bills. By reducing his or her debt level, a buyer boosts his or her credit score and demonstrates a positive payment history to lenders.

A person may need to be strategic when deciding which debt to pay off first, however. Buyers should handle delinquent accounts first to improve their credit scores. They should then move onto paying off high-interest debt.

Correct credit report mistakes

Credit reports aren't perfect, and buyers must fix those errors. If a report contains false or incorrect information, it should be addressed early in the homebuying process. Doing so will help eliminate unforeseen hiccups during the loan process.

Gather documents

According to HSH.com, buyers will typically need to provide the following documents during the preapproval process:

  • Two years of federal tax returns.
  • Two years of W2s.
  • Thirty days' worth of pay stubs.
  • Sixty days (or a quarterly statement) detailing all assets in checking, savings and investment accounts.

Control spending

Taking on more debt or opening new lines of credit are a few ways to be denied a mortgage preapproval. Buyers can avoid being denied by sticking to a budget and lowering spending, NerdWallet explained.

With 2017 projected to be another hot year for purchasing homes, potential buyers should follow the above tips to better their odds of being preapproved for a mortgage.

 

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