_{SOURCE: investopedia.com}

Don’t let mortgage myths hold you back from homeownership.

From down payments to credit scores, there are many myths surrounding the mortgage process. Don’t let these myths keep you from buying your dream home. Learn the truth about what you need to get pre-approved.

1. Proof of Income

Potential homebuyers must provide W-2 wage statements and tax returns from the past two years, current pay stubs that show income and year-to-date income, and proof of additional income sources such as alimony or bonuses.

2. Proof of Assets

A borrower’s bank and investment account statements prove that they have funds for a required down payment, closing costs, and cash reserves. The down payment, expressed as a percentage of the selling price, varies by loan type. Many loans require the buyer to purchase private mortgage insurance (PMI) if they are not putting down at least 20% of the purchase price.

3. Good Credit

Most lenders require a FICO score of 620 or higher to approve a conventional loan or 580 for a Federal Housing Administration loan. Lenders typically reserve the lowest interest rates for customers with a credit score of 760 or higher.

4. Employment Verification

Lenders not only verify employment through a buyer’s pay stubs but will likely call the employer to confirm a borrower’s employment and salary.

5. Other Documentation

Personal documents and identification required for pre-approval include the borrower’s driver’s license, Social Security number, and authorization to allow the lender to pull a credit report.

Share this blog post with a friend who is nervous about the home buying process. And if you’re planning to buy a home, let’s chat!