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:
Other documentation (if necessary):
* Every lender will require a slightly different set of documents. You should consult with your mortgage loan originator for their lender’s specific list.