Prequalifying For Your Home Loan: 5 Benefits
Summertime is in full swing and people are using their vacation time to look for a new home. Most people with school-age children want to make a move before the start of the new school year. Realtors recommend prospective home buyers to be pro-active in getting pre-qualified with a lender before going too far into the home buying process. We are here to help by providing tips for obtaining financing. Also, we want to ensure that the terms of financing will meet your goals and objectives.
Benefits of being prequalified
- You have more peace of mind when shopping for your home.
- Lenders can provide you with a pre-qualification letter to accompany your offer, thus strengthening your offer.
- The Seller knows you have your financing in place, freeing them up to focus more on finding your dream home.
- The Realtor knows your price range and doesn’t show you property outside your goals.
- The lender obtains your initial information before you find a home, which expedites the process once you have made the selection of a home.
Before you take the step to getting prequalified you should begin to gather and organize documents related to your income, assets and banking. When beginning the prequalification process, look for a lender who will first listen to you and understand your goals and objectives. Also, it's helpful to let them know what “life events” you have experienced that brought you to the point of shopping for a new home. We will explore the following four general areas of prequalifying for your loan:
Four primary areas
- Source of Income – We generally look at your income streams encapsulating at least two years. If you are a W-2 wage earner, we will need your last two years of W-2s and most recent 30 days of paystubs. If you are self-employed, have commission income, have unreimbursed business expenses, we will need your last two years of tax returns with all schedules.
- Assets available for use in the home purchase – Bank statements covering the last sixty days for all assets including retirement accounts.
- Credit Reputation – we will explore your experience and review all of your current and most recent obligations.
- Property – what kind(s) of properties are you looking at? Are there recent settled sales similar to what you are looking for to support value? What are the taxes, insurance premium and HOA dues?
Keys to getting a mortgage
It is best to always check out your options. There are many companies that will lead you down a long path, costing you time and money. Make sure you partner with a lender that you feel comfortable working with and that returns your calls promptly. Availability for all parties is very important to help expedite the process.
If you are considering purchasing a home, we would love to talk with you and discuss what mortgage options are available.