There are many steps in the home buying process. One that isn’t technically required, but is beneficial is getting pre-qualified for a mortgage. This is different than getting approved for the actual loan, it’s only an estimate of the maximum loan amount the lender is willing to give you. Getting this pre-approval will help you think more realistically about your price range and makes your offers look more legitimate to buyers.
The bank will look at your income to debt ratio when you go to get pre-qualified, so make sure you have your financial records in order. To help get you ready, here’s a checklist you can use to get pre-qualified for a mortgage.
- Monthly household income- have last year’s W2 and at least two recent paystubs to prove how much you’re bringing in.
- Monthly household debt– gather up documentation for everything you’re making monthly payments on. This includes car payments, credit card debt, student loans, medical bills, etc.
- Other assets– the bank may also inquire about other financial assets you have at your disposal.
- Residential history– put together a list of all the places you’ve lived over the past two years. You’ll need to know the address of the residency and the dates you lived there.
- Know where you stand– you’re likely to get some questions about what kind of home you’re looking for and when you’re planning on buying it.
- Ask your own questions– one great part of getting pre-qualified is that it opens the door for you to ask questions about the loan as well. Take advantage of this time to get answers to any mortgage related questions you might have. Banks can be somewhat flexible, so if you think structuring the loan a certain way will be better for you, ask if it’s possible.
Getting pre-qualified is a great step to take toward getting your next home. If you have questions about the home buying process, give us a call and we’ll be happy to help you out.