In this recovering and fiercely competitive real estate market, it is incredibly important to stay ahead of your competition.
Apartments for sale in the NYC housing market get an average of three offers. One of the most important factors to determine whether or not a seller will accept your offer is the preapproval letter.
What is a preapproval?
Pre-approval is a commitment in writing from a lender that a borrower would qualify for a particular loan amount based on income and credit information. Generally a mortgage broker or banker writes this letter.
Why you should get preapproved?
In the New York City real estate sales market, due to the limited inventory, sellers are receiving multiple offers on the same unit. Because of this, they want to know when you submit the offer that you will be able to follow through. If you make an offer on an apartment without a preapproval, your offer will not be taken as seriously as an offer from another person with a preapproval and you could lose out on purchasing the home of your dreams. Additionally most bank-owned homes will require a preapproval letter from a lender before accepting an offer.
What is involved with getting preapproved?
In order to obtain a preapproval letter you will need to contact a mortgage broker or lender. You will typically be approved in as early as the same hour but could take up to a few days.
Documents you’ll need to provide to get a true preapproval:
- Your W2 from the past two years
- Your paystubs from the past three months
- Your tax returns from the past two years
- Your checking or savings bank statements from the past three months (this will likely have your down payment funds in them as well)
- Your statements for all your other assets (stocks, bonds, retirement accounts) for the last two months
- Landlord or current mortgage information
- Your divorcee decree, if applicable
- If you are self-employed: Your business tax returns for the past two years in addition to your year-to-date profit and loss statement and year-to-date balance sheet
Credit Report and Credit Score:
The lender will also pull your credit report and score for you and your co-borrower (if applicable)
The lender will be looking for missed payments, late payments, and other credit discrepancies. Your credit score will affect your ability to qualify for a loan and determine how low of a rate you can get. Generally a score above 720 will get you the most favorable mortgage rates.
