Pre-qualification is the process of meeting with a lender or mortgage broker and finding out what loan amount you can qualify for and the maximum purchase price for a property taking into consideration down payment and reserves. They will look at several factors to come up with your qualification, most importantly the 4 C’s of Lending. These include but are not limited to your income, debt, down payment, credit, and the type of property you are looking for. It is important to get pre-qualified so you, your lender, and your realtor are all on the same page when it comes to the properties you are looking at. It will also eliminate problems in the future and help to make the transaction run smoothly.
Some lenders will issue a pre-qualification letter to the buyer and the buyer’s real estate agent. Other lenders may provide a pre-approval letter. Pre-approval is the same process as pre-qualification but typically means that the lender has gone a step further and pulled your credit. They have also run your credit profile through their automated underwriting system. Not every lender has this ability and you should consult with your mortgage loan originator to confirm.
Below is a typical list of documents that a lender or mortgage broker may ask for
- 2 Most recent years of Federal Tax Returns (All schedules and attachments)
- 1 Full month or 30 days of most recent pay stubs
- Most recent loan statement for any “installment loan” (ex. Car, Student, Personal, etc.)
- a.They will ask about credit card debt as well but will not ask for phone bill, internet, etc.
- 2 Most recent months of bank statements for any and all accounts
- Other documentation (if necessary):
- a. Mortgage statement for any properties owned (plus proof of taxes, insurance, maintenance fee, HOA dues, etc.)
- b. Certificate of Marriage
- c. Divorce Decree
- d. Death Certificate
* Every lender will require a slightly different set of documents. You should consult with your mortgage loan originator for their lender’s specific list.
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