Pre-Qualified
In the Mortgage process pre-qualified is the first step towards mortgage. It can be done over the phone or in the internet. It does not involve any cost.
Loan pre-qualification does not include an analysis of your credit report or it does not look past the statements you have made about your income, assets, and liabilities.
It means that a lender has evaluated your creditworthiness and has decided that you probably will be eligible for a loan up to a certain amount.
The pre-qualification letter is an approximation—not a promise—based solely on the information you give the lender and its evaluation of your financial prospects. It gives you an idea of the mortgage you might qualify for.
It can help you if you are not aware of your current financial position towards your mortgage amount
Pre-Approved advantages:
The pre-approval process begins when your lender creates a loan file with your loan application
The lender will go through your financial information like credit report, pay stubs, bank statement, salary, assets, and obligations.
After the process lender will issue the pre-approval letter for the specific mortgage amount. Your loan is contingent only on the appraisal of the home you choose.
The pre-approval letter spells out things like the maximum loan amount, loan type (conventional/ VA/ FHA) and any conditions that must be met before final mortgage approval is made. Conditions include things like a satisfactory property appraisal and proof of a clear title.
The pre-approval gives you edge over others.
The reliability and simplicity of your offer stand out over other offers
Key documents required for pre-approval process
- Borrower Identification
A state-issued photo ID driver’s license or identification card. All borrowers/co-borrowers must provide ID. - Tax Returns
• 2 years of tax returns and W-2 forms if you work for a company.
• If you are self-employed, then you’ll most likely be asked for a profit & loss (P&L) statement and federal tax statements for the last two years. - Pay Stubs
• Provide the most recent 30 days of pay stubs or profit/loss statement. - Bank Statements
Provide 2 months of the most recent, complete bank statements. Include all pages for all accounts. Statements much show your complete account numbers.
• Savings
• Checking
• Brokerage statements - Other Documents for Pre-Approval
If applicable, the following documents may also be requested of you:
• Bankruptcy discharge paperwork
• Divorce decree
• Social Security/Disability Statement
