How to Get Pre-Approved for a Mortgage

Getting pre-approved for a mortgage to buy a house in a town like Hanover, Lebanon, Quechee, or Enfield is an important step in the home buying process as it helps you understand how much you can afford and demonstrates to sellers that you’re a serious buyer. Here’s how to get pre-approved for a mortgage:

10 Steps to Get Pre-Approved for a Mortgage

Check Your Credit Report

Start by checking your credit report from all three major credit bureaus (Equifax, Experian, and TransUnion). Review your report for any errors or inaccuracies that could affect your credit score.

Improve Your Credit Score (if needed)

A higher credit score typically results in better mortgage terms, including lower interest rates. If your credit score is lower than desired, take steps to improve it by paying bills on time, reducing credit card balances, and addressing any errors on your credit report.

Gather Financial Documents

Lenders will require various financial documents to verify your income, assets, and debts. Gather documents such as pay stubs, W-2 forms, tax returns, bank statements, and investment account statements.

Calculate Your Debt-to-Income Ratio

Lenders use your debt-to-income ratio (DTI) to assess your ability to repay a mortgage. Calculate your DTI by dividing your total monthly debt payments by your gross monthly income. Aim for a DTI below 43%, although specific requirements may vary by lender.

Research Mortgage Lenders

Shop around and compare mortgage lenders to find the best fit for your needs. Consider factors such as interest rates, loan terms, fees, and customer service reputation. You can choose to work with banks, credit unions, mortgage brokers, or online lenders. Local Hanover lenders like Rich Szollar at Title Mortgage or Jake Donovan at Legacy Mortgage are excellent choices to consider when looking for a mortgage.

Get Pre-Qualified

Pre-qualification is an informal process that gives you an estimate of how much you may be able to borrow based on your financial information. You can typically get pre-qualified online or over the phone in a matter of minutes.

Complete a Mortgage Pre-Approval Application

To get pre-approved for a mortgage, you’ll need to complete a formal application with a lender. Provide accurate and thorough information about your income, assets, debts, and employment history.

Submit Supporting Documents

Once you’ve completed the pre-approval application, submit the required supporting documents to the lender for verification. This may include pay stubs, tax returns, bank statements, and other financial records.

Wait for Pre-Approval Decision

The lender will review your application and supporting documents to determine whether you qualify for a mortgage and, if so, how much you can borrow. This process typically takes a few days to a week.

Receive Pre-Approval Letter

If you’re approved, the lender will issue a pre-approval letter stating the loan amount you’re qualified for, the interest rate, and any conditions or contingencies. You can use this letter to demonstrate your financial readiness to sellers when making an offer on a home.

Remember that a mortgage pre-approval is not a guarantee of financing, and your actual loan approval will depend on factors such as the property appraisal and underwriting process. It’s important to continue monitoring your finances and avoid major changes (such as quitting your job or making large purchases) until after you’ve closed on your home.