Buying a home is an exciting process, but before you get into choosing floor plans and neighborhoods to shop for a home, be prepared with your finances so you can get approved for your home mortgage. Here are some recommendations for you to use to help you through the home mortgage approval process.

Get Pre-Qualified

Realistically, you would never go out shopping for a vehicle, trailer, or motorcycle without knowing how much you are approved for through a bank and also how much you can afford with your current income. You don't want to overextend your borrowing capacity and take on too much debt, especially in a home purchase, and you cannot successfully look for a home to buy if you don't know how much you can spend. 

One of the first steps to buying a home is to get pre-qualified for a mortgage. A mortgage pre-qualification status gives you a loan maximum that you will be able to spend on a home. Keep in mind you may be qualified for more than what you are actually comfortable with, so be sure to evaluate what mortgage payment you are happy with and proceed from there to evaluate loan amounts based on the current interest rate in an amortization calculator. For example, if you are pre-qualified for a $450,000 loan, but the payment is more than you want to be responsible for, reduce the home search price to $400,000 as a maximum and look for a home that is within that budget.

Collect Your Loan Paperwork

When you are ready to start your loan process to apply, you can complete an application with your mortgage broker. They will ask you for important details about your income and items on your credit report, so be ready to provide them with the documentation that they need. Some of your documentation will come from your bank statements and any investment accounts to show what you have for retirement, in savings, and cash on hand. You will need to make a copy of your most recent bank statements, and be sure to include blank pages because your mortgage lender will need them to be included when they submit them to the underwriters. 

Include details of your income, whether it is from your employer or from independently contracted employment income. If you are self-employed or work as an independent contractor or complete freelance work, you are not going to receive traditional paychecks and 1099s. You will need to get together the past couple of years of your tax returns and your 1099s and profit and loss statements. If you can compile them together in advance of your application, they will be ready to hand over to your mortgage broker. Otherwise, you may be scrambling to collect documents, request paperwork, and research your past tax records, which can take some time. Your mortgage broker will be able to submit them in a timely manner, and your mortgage approval process can continue so you can close on your home sooner rather than later.

For more information, contact a local lender, like Christy Christian Home Loans.