I have spoken several times in the past about this topic, but I feel it is an important topic to revisit, especially in the new year. I find many of my clients, especially first time home buyers, have some vague notion of what a “preapproval” is, but they do not know what is required to get one, or who can supply it.

These clients will call me, usually at the urging of their realtor, and start to give me a whole bunch of information that is not really relevant to the preapproval, and none of the information that is. And after several minutes of talking, I finally get the point across that a preapproval is simply a confirmation from me that, based upon the circumstances today, and assuming you are 100% truthful with me, we would be able to approve you for a mortgage of some amount. Once they understand the basic concept of what the preapproval is, and why it is so important (would you take your house off the market to sell to someone who may not be able to get financing?), they then usually ask me what I do need from them.

And the answer is simple: it depends. Now, I can tell you that I will always need your last 2 years W-2’s and tax returns, your last 2 pay stubs if you are employed, your bank statements for all bank accounts, brokerage accounts, or IRAs, and a whole bunch of personal information. In addition, I will need additional documentation from self employed individuals, retired individuals, or individuals who are 1099. If you maintain funds overseas, that can also require additional documentation, as can home ownership, especially of investment properties. Beyond that, there are occasions when additional documents are required, but that is more of a case-by-case basis.

With this information, I can review it, show it to an underwriter, and write up a serious preapproval based upon your unique situation.

If you have any questions about mortgage preapprovals or how to obtain one, please contact me. And if you have anything to add about the mortgage preapproval process, please leave a comment.