How To Pre Qualify For A Loan
You can pre qualify for a loan before formally applying for a loan.
The lender gathers information from you about your income and debts and makes a preliminary financial determination about how much house you may be able to afford. Usually, a prequalification letter is issued showing the amount for which the lender has pre qualified you.
Please understand that the lender will take the information that you give about your income, assets and debts in order to pre-qualify you. The pre qualification is only as good as the information that you give, and is subject to the lender's verification of that information during the formal application process.
Buy your first home first. Be realistic: Don't expect to be a first time home buyer and jump right into your life-long dream home.
It's a good idea to know how expensive a home you can afford before you start shopping for one, and a pre qualification from a lender can help. If you can provide a pre qualification letter, sales agents and sellers will know that you are an able buyer and may take your offer more seriously. A pre-qualification letter may sway a home seller to negotiate with you as opposed to another buyer who is not pre-qualified. If you are refinancing the loan on your existing home, then the prequalification process should help you decide whether refinancing is a good idea for you.
Here are a few items you need to consider before selecting a mortgage program:- How long do you plan to own the home?
- What is your financial outlook for the near-term and long-term?
- Do you have future financial obligations (such as college, retirement, elderly care) that might limit your future ability to meet debt obligations?
- How comfortable are you with a payment amount that changes over time?
- Will you consider a balloon payment?
- What is your liquid asset position? Are you willing to make a larger down payment?
- Are you self-employed?
- How is your credit history?
- Are you a first-time homebuyer?
- Will you have adequate funds available after debt payments for retirement funding and other needs?
Buyers Pre Qualification Loan Mortgage Checklist
- W-2's and a year-to-date pay stub will expedite income verification
- If employed less than two years, supply the name(s) and addresses of previous employers to verify a full two years
- Self-employed borrowers, please supply two years tax returns (all schedules), as well as year-to-date profit and loss statements
- A list of all assets: personal, cars, boats, etc.
- If you rent, supply landlord name and address (cover a two year period)
- If you were a full-time student at any time in the past two years, please be prepared to verify by a diploma or transcripts.
- Account numbers for each bank account where deposits are held, plus the name, address and zip code for each depository
- Loan account numbers for each mortgage loan or installment loan outstanding, plus the name, address and zip code for each lender
- A list of all Credit cards, including "0" balance accounts, with balances and payment information.
- Schedule of real estate owned including type of property, rental agreements, taxes, insurance and principal - interest amount