5 Great Reasons to get Pre-Qualified for a Home Loan

Get Pre-Qualifed and Pre-ApprovedAs a potential home buyer, have you ever wondered if you should get pre-qualified for a loan before starting your home search? Well, the answer is… absolutely! Here is a list of five reasons you should get pre-qualified for a loan prior to your home search:

  1. You won’t waste time considering homes you cannot afford. You will actually save time looking at homes that best suits your actual budget.
  2. You will know what your approximate payments will be in advance.
  3. Sellers may find your offer to purchase more favorable if they know your ability to secure financing. In other words, this may make your offer more competitive if you are in competition with other offers.
  4. You can select the best loan package for your needs without being under pressure.
  5. You can have a peace of mind.

As you can see, getting pre-qualified for a home loan can save you time, energy, and money. During the pre-qualification process, lenders will typically run a credit check and ask you for some basic financial information (i.e. income, assets, and debt) to help them decide how much home you can potentially afford. Although getting a pre-qualification letter is an important resource, it does not mean you will automatically be approved for a loan.

Tip: Before making an offer on a home, take the pre-qualification letter one step further and get a pre-approval letter. In this step, your loan officer will typically ask you to provide…

  • Paystubs for the past 30 days
  • W-2s for the past 2 years
  • Tax returns for the past 2 years
  • Bank statements for the past 2 months
  • 401K and IRA quarterly or bi-annual statements
  • Documentation for other income (i.e. social security, pension, disability, retirement, and self-employed income)

If your loan officer has not pulled your credit, they will during this step. You may even be asked to sign a full loan application and any additional paperwork necessary to get your file underwritten. Although this step requires more paperwork, this will give you the confidence you need when making offers that your loan will be processed quickly and easily as long as all the information you provide is accurate.

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