Home Buyer Loan Pre-Qualification
Today I want to discuss Home Buyer Loan Pre-Qualification! I thought I would share with you, a few things that I’ve learned from lenders over the years, when it comes to home buyer’s being pre-qualified for a home loan.
When most buyers first contact me, especially first time home buyers, they are usually not sure which direction they need to go first, as they begin their journey to home ownership. The first step whether you are a first time home buyer, or you are a seasoned buyer, is if you will be paying for your new home with a home loan (versus paying for it in cash), you will need to be pre-qualified, so we will know how much buying power you have, if there are any special circumstances we need to work with, and most importantly, what monthly payment you are most comfortable in, so we can determine what price range of home will get you that monthly payment.
What Are You Comfortable With
Just because you may qualify for a $500K loan, doesn’t mean you want the mortgage payment that goes along with that loan. I want you to enjoy your new home and life, and not have every penny you make going to the mortgage, where you will find yourself what we call “house poor”! So the first step is to get pre-qualified. In Arizona, our Residential Real Estate Contract, requires that a pre-qualification form (PQF) is attached to offers as they are submitted, so once I have this document from your lender, we are ready to go house shopping.
Lenders Can Affect Your Experience
I’ve worked with a variety of lenders over the years that I’ve been a REALTOR®. I’ve had great experiences, less than great experiences and even some disastrous experiences. Luckily I have a few amazing lenders that I work with who my clients love. My lenders are extremely informative with not only me but also our clients. We believe in educating our clients and providing them with the best options available so that they can make a well-informed decision on both their financing, as well as the home they select. We work together as a great team, along with our preferred Escrow Officer, Home Inspector, etc., combining our industry knowledge and problem-solving skills, to close transaction after transaction as seamlessly and smoothly as possible.
What Is Needed For Pre-Qualification
Here is a great list my lenders have provided of the major items that are needed to begin the pre-qualification process. If you are thinking of buying a home and will be financing it, start searching through your files for these basic items:
- The last 2 years of Federal Tax returns.
- The last 2 years of W2s for anyone who will be on the loan application.
- 30 days’ most recent pay stubs for anyone who will be on the loan application.
- 2 months’ most recent bank statements (this includes all pages and all accounts you have.)
- 2 months’ of retirement statements (this includes all pages and all accounts you have.)
- Divorce decree, child or spousal support paperwork.
Additional Documents Likely
Additional documents may be necessary, depending on your individual situation, and if you are self-employed, there are different documents you will need to provide. A loan application and disclosure forms will be provided to you during the loan process, and lenders will also need to pull your credit score to determine what loan program options may be available to you. If you haven’t reviewed your credit report recently, the Federal Government allows you to order your Credit Report from all three of the Credit Agencies for free once every 12 months. Learn more about that here. It does happen on occasion, that your credit score may not be high enough to qualify for a home loan, so there may be some work that you have to do with your lender regarding your credit, to improve your credit score to either qualify for a home loan, use a particular home loan program or get a better interest rate. It is always best to start the pre-qualification process early, in case credit report issues have to be worked on, instead of just beginning this process at the time you need to be looking for a home.
If you or someone you know is looking at buying a home or is in need of a lending referral, please contact me, as I’d love to put my experience to work for you.