In a previous post, we discussed why pre-approval should be the first step for first-time home buyers and explained the difference between pre-approval and pre-qualification.

In a nutshell, a pre-approval gives you a clearer picture of your buying power based on a more comprehensive review process. It also positions you as a more serious buyer to sellers and real estate agents.

Now, let’s talk about that pre-approval process for first-time home buyers. The more prepared you are with required documentation, the more smoothly the pre-approval process will go.

Here is a list of documents you’ll need to provide to your loan officer.

• A completed mortgage application with your Social Security number
• Pay stubs from the last 30 days
• W-2s from the last two years
• Federal tax returns from the last two years
• Bank statements and investment account statements from the last two months
• Photo identification

Related: 10 Documentation Mistakes that Complicate the Mortgage Process >>

In addition to reviewing this information, we’ll have a very open and honest discussion about your finances. We need to understand things like bonuses, overtime, student loans, credit card debt and investments so we can recommend the right mortgage program and the right price range that you should be considering.

The next step is to pull your credit score from the three credit reporting bureaus. The higher your credit score, the more likely you are to qualify for low-interest rates and various types of loan programs.

If we notice any red flags that could prevent you from getting a pre-approval or qualifying for a low-interest rate, we’ll explain those to you and offer suggestions about how to address them.

We also recommend checking your credit reports to make sure all information is current and accurate. Each of the three credit reporting bureaus provides one free copy of your credit report each year, so take advantage of that.

Once we’ve reviewed and verified all of the information you’ve provided, we’ll provide you with a pre-approval letter (assuming you’re approved) that shows the maximum dollar amount that we’re willing to lend. This letter will give you more clout when you look for a home and make offers.

There are two things to keep in mind about pre-approvals.

First, a pre-approval does not guarantee approval for a mortgage. After you’ve made an offer to purchase a home, there will be a final approval process that involves an appraisal of the home you want to buy and more underwriting, which we conduct in-house.

Second, just because you’re pre-approved for a certain amount, that doesn’t mean you should look for homes in that price range. We suggest creating a budget to make sure you buy a home that allows you the flexibility to save and live the lifestyle you enjoy.

Remember, if you’re thinking about buying your first home, your first call should be to Greenway Mortgage. Let us remove help to remove risk and uncertainty from the equation by walking you through the pre-approval process.