A key step in getting a mortgage is prequalifying. Mortgage prequalifying is like having a guide when you climb a mountain – the mortgage lender will help you go through the mortgage application process. This necessary and helpful step gives you and your mortgage lender a clear picture of your financial standing and credit worthiness. It also reveals any items you need to shore up to get the loan.
Here are a few items you need to get the ball rolling:
- Your credit report — This is a critical piece of info that forms the core of your financial profile. Without a credit report, you will have a very difficult time getting started.
- Personal information — including driver’s license or other photo ID; Social Security number; home and work addresses and phone numbers; and an email address.
- Gross monthly income — you’ll need several pay stubs that provide your employment and the way you’re compensated, like hourly or salary. You will also need to be prepared to provide your last two years tax returns, especially if you are paid commission, bonus or are self-employed.
- Employment details — length of time you’ve worked at your current job and a history of other jobs you’ve held.
- Total monthly expenses — recent credit card statements, car payment statements and other credit accounts you may have such as student loans or personal loans.
- The estimated loan amount that you’re applying for.
- The estimated amount available for your down payment.
- Type of mortgage — are you seeking a fixed or adjustable rate?
As you can tell, pre-qualifying for a mortgage involves some work. That work pays off big time and is a great way to get specific figures working for you while you’re house hunting. And prequalifying has another benefit: it lets a seller know you’re serious about buying a house when it’s time for the next chapter in your residential life.