Get Pre-Qualified for a Mortgage

 

To give yourself the very best chance at winning the bidding on the house you want, you’ll want to get pre-qualified for a mortgage. This is a process that allows the lender to look at your finances and decide how much of a mortgage you can safely carry.

 

In order to prequalify you for a mortgage, the lender will look at your credit history and verify your income. If you pay your bills on time, have the funds for a down payment, and can demonstrate your current and ongoing income, the lender will grant you a pre-qualification letter. This letter states that you have been pre-qualified for a mortgage.


You should know that your pre-qualification letter does not 100% guarantee you access to a loan and is (usually) valid for 60 - 90 days. Be sure to read the details carefully when you are granted pre-qualification so that you understand all of the terms.


What Does Pre-Qualification Mean?

When you make a purchase offer on a home, the seller and your real estate agent will require a pre-qualification letter. Because the housing market is intensely competitive, you will want to be prepared with proof that you will be able to close the deal. Time is money, so a buyer who has proof of their ability to purchase will be given preference over someone who does not.

 

Preparing for Application

No one wants to find out they have a problem on their credit reports, but it’s much better to find this out before you try to pre-qualify for a mortgage. Prior to heading to the lender, take the time to check your credit reports and credit scores. This will give you an opportunity to look for mistakes or problems on your reports and fix them before you begin looking for a lender.
 

What to Bring to Your Appointment

Once you’ve made sure that your credit score is robust and accurate, it’s time to go see the lender. Be sure to bring the following paperwork with you.

 

  • Income Verification

Bring pay stubs, W-2s, and tax returns from the past two years. If you have other sources of income that you would like factored into the assessment process, you must bring documentation of these income sources as well.

  • Asset Verification

The lender will want to see your bank account statements and any investment accounts. If someone is giving you the money for the down payment, present documentation that clearly states this. You will also need a letter stating that the money is a gift, not a loan.

  • Personal Identification

You will be asked to present a valid form of ID. This can be your driver’s license, VISA, Military ID, State issued ID or passport. You will also be asked to give your SSN for the credit check.

 

The Three Stages of Mortgage Application

 

1.    Pre-qualification

You will meet with a mortgage professional to discuss your home loan needs and goals. You’ll discuss all loan options available to you. After your lender reviews your income and expenses, you’ll be advised about the price range you can afford. You will be given a pre-qualification letter to present to sellers as you begin your home search. Sellers take pre-qualified buyers much more seriously, so you will have a much better chance of landing the home of your dreams.

 

2.   Home Inspection

After you find a home that meets your needs, you will be able to make an offer to purchase the home if you are pre-qualified. After your real estate agent makes an offer on your behalf, you’ll have a set period of time in which to have the home inspected. It is highly recommended that you invest in a professional home inspection team so that no serious structural issues are missed. Once the home has officially been inspected, you will be able to negotiate for any needed repairs with the seller. You can also cancel the contract if major repairs are needed.

 

3.   The Mortgage Commitment

Once the home inspection is complete, your lender will advise you on the next necessary steps in your home purchase transaction. An appraisal will need to be completed and homeowners’ insurance must be secured. Your mortgage paperwork will be finalized, and you will move on to the closing of your new home!