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When You Should Get Pre Qualified

home purchase

When You Should Get Pre Qualified

Ideally, you would want to get pre-qualified 15 days BEFORE shopping for a home. If you get pre-qualified 30 days before shopping, you will need to provide updated income and asset documents.

When you should get pre qualified. This is a common question or concern for home buyers. Obviously, the sooner the better but most people will begin shopping prior to even knowing if they can qualify for a mortgage loan and have no idea how much they can afford based on their debt-to-income.

Ideally, you would want to get pre-qualified 15 days BEFORE shopping for a home. If you get pre-qualified 30 days before shopping, you will need to provide updated income and asset documents. Your income documents, such as pay stubs, must be the most recent 30 days and must be updated once one of your pay stubs are outside of the 30 days from closing.

Your asset statements must be for the most recent 60 days from closing.  Again, expect to provide updated information the longer it takes you to find a home.

mortage loan officer
Photo by Austin Distel

Be prepared before you contact a mortgage loan officer. Collect your last 2 years of personal tax returns, last 2 years of W-2s, most recent 30 days of paystubs, and any award letters, if you are receiving any sort of benefits or retirement. You will also need to obtain the most recent 60 days of asset statements for your checking, savings, and retirement accounts. You will need to identify yourself by providing a driver’s license or passport as well as a social security card.

If you are a business owner or self-employed borrower, you will need to provide the last 2 years of business tax returns and year-to-date Profit and Loss statement(s). If you have rental properties, your mortgage loan officer will need the mortgage statements for each property. If you own them free and clear, you will need to provide the homeowner’s insurance declarations page, property tax statement, and homeowner association dues statement to calculate in the debt-to-income figures.

This will prevent delays and the mortgage loan officer will love your preparedness and attention to detail.

In today’s market, you will find you need to provide a pre-approval letter or pre-qualification letter as soon as you find the home of your dreams. Both letters are similar in nature and are needed to be taken more seriously when making an offer.

These letters indicate you have provided what is needed to decide on whether you qualify for a mortgage loan for a particular dollar amount. This happens quickly, if your mortgage loan officer has experience and works with a team for support. Talk to your mortgage loan officer and to a realtor to determine timelines and communicate expectations to both.

The realtor will appreciate you having the pre-approval letter or pre-qualification letter in hand. You may be curious as to the difference between the two letters your mortgage loan officer will provide. A pre-qualification is based on a credit pull and on the mortgage loan officer reviewing the documents you provide to get a general idea of your qualification.

A pre-approval letter is based on an underwriter reviewing the documents and issuing a conditional approval for the loan you applied for while issuing standard conditions that must be met for final approval. These conditions are typically letters of explanations, third party items such as appraisal, title work, insurance, etc., and any other supporting documentation for income or assets, etc.

The pre-qualification will take about a day and the pre-approval will take about a week. Therefore, it is important to get your approval 15 days before shopping for your new home. Some realtors will prefer the pre-approval letter to avoid any complications to disrupt the flow of the purchase.

So, first you want to talk to your mortgage loan officer and provide what is needed. Then you want to talk to a realtor. Most times your mortgage loan officer can give you a great list of realtors they trust and have similar work ethic. The final step would be to start shopping for homes. Please do your due diligence when shopping for homes and make a list of the items most important to you when picking your home.

This could be distance from work, traffic coming and going during high traffic times, number of bedrooms or baths, big back yard, school district, and many other items. This information would be great to share with your mortgage loan officer and the realtor to make your home buying experience better. Maintain your power by asserting your needs so you can get the home you love.

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