Get pre-approval for a mortgage before you set out.
Buying a new home is a very exciting prospect, and many people set of on the hunt for a new nest with great enthusiasm. This enthusiasm can often turn to disappointment if one simple step has not been taken prior to setting out. Pre-approval from a mortgage lender stating that you are approved for a certain amount of mortgage if taken up within a stated period of time, will help avoid unnecessary disappointment.

Pre-approval by a mortgage lender means that the lender has verified all your financial information and that they are prepared to lend up to a certain amount of money to you.

In order to assess whether they will grant pre-approval and following on from that a mortgage, a mortgage lender will require a fair amount of information from you, so be prepared to have this available when making your application. The information they will require is, but not necessarily limited to:

• Employment & Income information: Where do you work? How long have you been employed there? What is your income? Contact details of a person authorized to verify your employment information at the place where you work. Wages slips, salary advices, End of Year PAYG summary, or tax assessment statement.
• Other income: Proof of any other income such as benefits, pensions, interest, dividends, child support
• If you are self employed they will need to see Profit & Loss statements and balance sheets for at least two years, as well as final tax assessments issued by the tax office.
• What are your debts: What amounts do you owe, and to whom. What amount do you have to pay monthly in order to service these debts. How much have you actually being paying monthly towards the reduction of these debts. The ratio of credit card debt, to say car loan debt.
• Proof of payment of rent or current mortgage: You will need to show how much rent you are paying and proof of payment, and/or current mortgage level, and verification of payments made.
• Your assets: How much money do you have in a bank account. Where is the deposit for the purchase coming from, do you have enough cash available to meet all costs associated with the purchase of a property.
• Credit Report: You may be asked if you have any adverse credit history, however the lender will not have to ask you for this information as they will be able access a credit report.

A prospective buyer armed with a letter of pre-approval from a mortgage lender is a welcome sight to any real estate agent and property seller, for two main reasons. Having agreed to purchase a property, many buyers then go off to find finance, only to arrive at a situation where they have to pull out of the sale - this is obviously a disappointing result to more than just the prospective buyer. The other reason a preapproved purchaser is a welcome prospect, is that having already completed the approval portion of the mortgage application, that time will be saved in the rest of the process up to completion.

So before setting out on your home hunting excursions, go and get a pre-approval letter from your mortgage lender and avoid being disappointed that you dream home has to slip you by.