Are you planning to buy a house in Boston or anywhere throughout Massachusetts in the coming months?
Getting pre-approved is an important step for home buyers.
The two main benefits of pre-approval are that it allows you to shop in a known price range, saving time, effort, and disappointment. It also gives you negotiating leverage because you will be perceived as serious buyers rather than tire-kickers.
As important as pre-approval is, there still remains some confusion about exactly what it entails and what documents are required. To help dispel some of that confusion, we offer this detailed look at the documents you need for pre-approval when buying a house in Boston.
Stages of Mortgage Lending
But first, before we get into the specific documents pre-approval requires, let’s look at the stages of the mortgage process to gain a better understanding of why the documents are required, as well as where and how pre-approval fits into the process of buying a house in Boston. The typical stages, which often require many of the same documents, are:
In this first stage, the lender reviews your financial situation to determine whether you can qualify for a loan and to determine how much you can borrow.
The underwriter reviews the loan application and supporting documents to make sure you and the property in question meet all pertinent requirements and guidelines.
CONDITIONAL MORTGAGE APPROVAL
This is the penultimate step in which the underwriter requests additional documents and information in order the give the go-ahead for the “clear to close.”
In this final stage of buying a house in Boston, the prepared and reviewed documents are finalized and signed, money changes hands, and the transaction is finalized.
Documents Needed for Pre-Approval
The most common documents needed for pre-approval as a first step toward buying a house in Boston are:
PROOF OF SOCIAL SECURITY NUMBER
A Social Security card (or other acceptable proof) will have to be provided by all buyers on the mortgage loan in order to verify identity. Alternative proofs can include tax documents and other official documents that show borrowers’ SSN.
RECORD OF EMPLOYMENT
Typically, a lender will ask for a record of your past two years of employment, along with employer information. You will want to try to remain employed during your application process. If you do switch jobs, you might need to explain why you are doing this to the bank, especially if you are switching primary industries.
PROOF OF INCOME
In order to get pre-approved for buying a house in Boston, you will have to prove that you currently have income. Usually, your two most recent pay stubs (or copies of the electronic equivalent) will do the trick.
For pre-approval, your mortgage lender will almost always want to see W-2s and tax returns for the past two years.
You will need to provide information about and verification of where you’ve lived for the past two or so years.
Pre-approval for a mortgage for buying a house in Boston will also mean providing information about how much money you have in the bank and in retirement accounts. The main purpose of this is to prove that you have sufficient funds to cover things like the down payment and closing costs.
CREDIT AND DEBT INFORMATION
Lenders will also want to know about any outstanding debt you have – credit cards, auto loans, student loans, personal loans, and any other recurring debt.
Some lenders will also want to know about what and how much you have to pay each month. This would include monthly expenses like credit card payments, rent, and student loan payments.
A couple of other special-case documents you may have to provide when buying a house in Boston are:
- Gift letters from family or friends who intend to provide financial help with expenses like closing costs
- Self-employment documents (if that applies) such as profit-and-loss statements, balance sheets, and tax statements and/or 1099s.
Talk to Your Local Agent
The pre-approval documents listed above are the most common documents lenders require. There may be others depending on the lender, the type of loan, and the city or state. Both pre-approval and buying a house in Boston can be intimidating and complex processes that involve lots of emails and calls back-and-forth. That’s why you should talk to your Boston real estate agent to avoid making any missteps or costly mistakes. Our experienced agents at NextHome Titletown Real Estate are ready to help. Send us a message or give us a call today at (617) 657-9811.
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The property listing data and information set forth herein were provided to MLS Property Information Network, Inc. from third party sources, including sellers, lessors and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information are for the personal, non commercial use of consumers having a good faith interest in purchasing or leasing listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing or leasing. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information set forth herein.