The mortgage application process requires prequalification.The lender calculates how much you can borrow if you give them financial information.You will have a better idea of how much home you can afford once you are pre qualified.Prequalification is based on a cursory review of your finances.Pre-approved for a mortgage requires a more in-depth analysis, which is why you should follow prequalification.
Step 1: You should calculate your income.
Before you can be prequalified, you need to give the lender your gross income before taxes.This is what they use.Add up your income for the year.You should look at your pay stubs and W-2 form.
Step 2: You should add up your debts.
You need to give information about your debt expenses as part of the prequalification process.Don't include monthly expenses such as rent, utilities, cell phone costs, and etc.
Step 3: Determine the value of your assets.
A lender considers the value of your financial assets and will also want to know how much cash is willing to budget for a down payment, closing costs, and escrows.How much do you have in savings account, stocks bonds, IRAs, CDs, and real estate?
Step 4: Visit a lender's website.
It is easy to get prequalified for a loan.You can start the prequalification process online.You can type in the name of the bank into the search box.Clicking on a link at the website will take you to a phone number.If you stop into a bank and ask to speak to a loan officer, you can be prequalified.Don't limit yourself to banks.You can try credit unions and others.
Step 5: Provide some information.
Basic information, such as your name, phone number, and current address, will be asked by the lender.How much you want to finance will be asked.Information about your income, assets, and debts will be given to some lenders.You will have to submit this information online at other banks.
Step 6: You can get your results.
The prequalification process is very easy to do.The lender will tell you how much you can borrow based on the information you give.The lender is not making a promise to lend this amount or to even lend to you at all.Prequalification usually gives you a loan amount, but it's actually for a monthly payment.When shopping toward the upper limit of your prequalification, keep in mind that taxes and insurance vary for every property and could make you qualify for less or more than your letter indicates.
Step 7: Pre-approved will speed up the buying process.
Prequalification gives you a general idea of what you can borrow.The lender does not verify any of the information you give them, so you don't know what you can borrow.Getting pre-approved requires a more in-depth review of your finances.If you have been pre-approved, sellers will be more interested in finding out.You may be able to close on a home more quickly if you have pre-approval.
Step 8: Check your credit score.
If it wasn't done during your prequalification, a lender will pull your credit score as part of the pre-approval process.Before applying for pre-approval, check it.You can find your credit score by looking at your statements.Your credit score will be printed on the statement.You can get the score for free if you visit a housing counselor or credit counselor.Purchase your score from myfico.com.It costs about 20 dollars.
Step 9: Take care of your credit history.
You should get a free copy of your credit report to see if there are any errors that are holding down your score.Check for the following common mistakes and dispute them with the credit reporting bureau.Accounts that are similar to someone's Social Security Number.There are accounts that belong to your ex- spouse.There is an incorrect credit limit.Your credit report shows a limit of $3,500 on your credit card, but it doesn't mention a $35,000 limit.This can affect your utilization rate and credit score.There is an incorrect balance.If you only have $1,000 on a credit card, your credit report will show a $10,000 balance.
Step 10: Required documents can be found.
If you want to get pre-approved, you don't need to submit documents to the lender.Paycheck stubs, W-2 or I-9 forms, bank account statements, asset statements and List of real estate holdings are some of the supporting documents.
Step 11: You need to apply for a mortgage.
Ask your lender to pre-qualify you for a mortgage application so you can be approved.They will usually ask for information about the property you are looking to buy and your financial background.You don't have to have a specific property in mind to get pre-approved.Information about the property should be left blank.Time your application because your pre-approval is only good for 60-90 days.
Step 12: Pay the application fee.
Pre-approval isn't always free.You may have to pay an application fee.Some banks are willing to waive the application fee.Be sure to ask.Many lenders don't charge an application fee.When shopping, keep this in mind.
Step 13: Evaluate your commitment.
You should get a letter if you are approved.Information about how much you can borrow is contained in the letter.Information about interest rates is not included in the letter.This commitment is contingent.Due diligence on the house you intend to purchase is what a lender doesn't agree to lend to you until.