What to Know about Pre-Qualifying

Home ownership is a dream shared by millions of people around the world. Knowing what you can afford will make buying a home easier, but how do you know what you can afford? These tips will give you an idea of what to know about pre-qualifying for a loan before you start looking for a new home.

One of the biggest reasons why you’d want to pre-qualify for a loan is that you’ll have an idea of what price range house to look at. If you know you only pre-qualify for $500,000, you won’t be tempted to get your heart set on a house in a higher price range. It will also keep you from embarrassing yourself by not offering enough for a house.

Another benefit of pre-qualifying is that it can make receiving a mortgage quicker. You’ll already have established a relationship with the lender, so you know you can work with them which could make the process less nerve-wracking.

The following list shows the items you’ll need to provide to a lender for them to make a pre-qualification determination:

>>Income: W-2 tax forms for each wage earner for the past two years

>>Employment: Names, addresses, and phone numbers for each wage earner for the past two-three years

>>Creditors: List of all creditors owed money including the total amount owed as well as monthly payment and account numbers

>>Residence: Addresses of the last two places you lived. Provide the landlord’s name, address, and telephone number if you were renting. If you had previously owned a home, provide the name, address, and telephone number of the mortgage holder

>>Banking: Bank statements for the last three months

>>Pay stubs: Pay check stubs from the past month

>>Tax forms: If you’re self-employed, you’ll be expected to provide complete tax forms for the past two years

>>Gift letter: If you’ll receive gift money to help you buy the home, you must have a signed letter declaring the money as a gift

>>Divorce decree: If you’ve been recently divorced, you will be expected to provide a copy of the divorce decree as well as proof of any child support or alimony you’ll receive

>>Supporting documents: If you have other income such as social security, stock dividend interest, or something else, you’ll want to have that information available

>>Sales contract: Provide a copy of the purchase/sales contract if you have already found the house you’d like to purchase

The Loan Officer, once they have the above information will also ask if you have a down payment . There are many programs still available with downpayments of less than 3 % and Veterans may obtain loans with no money down within certain limits.They may also expect you to give them permission to run a credit check on you and anyone else that will be responsible for paying the loan. You may also be expected to supply 2 to 5 percent of the loan amount for closing costs.