A mortgage loan pre-qualification is an estimate of how much house you can afford based on your employment history, credit rating, savings and assets, proposed down payment, and debt-to-income ratio. Since the pre-qualification letter is an approximation based solely on the information you give the lender, it’s important to have accurate documentation.
Here are some of the items you will need to prepare:
- Determine your credit score and review your credit report for any errors. Federal law allows you to get a free copy of your credit report every 12 months from each credit reporting company. (Go to www.annualcreditreport.com for a free report.) If you find inaccuracies, contact the individual reporting company (Experian, Equifax, or TransUnion) where the error is listed to get it fixed.
- Pay off any late payments.
- Be careful with your credit. Don’t apply for any new credit cards or cancel any current cards. In addition, don’t make any other major purchases during this time. All of these can affect your credit score.
Savings and Assets
- Save as much money as you can – cut back on expenses and pocket that extra cash.
- Pull together your last 2 months of bank statements.
- Provide information on any real estate you already own.
Income and Debt
- Get your last 2 years of W2 forms.
- Collect pay stubs from the past 30 days.
- If you’re self-employed, you’ll need your last 2 years of personal and business tax returns.
- Have proof of any additional income, such as alimony or Social Security.
- If you’re renting, provide the last 12 months of cancelled checks to show you’ve paid your rent on time.
- List any debt, such as auto loans, student loans, or other mortgage loans that might not be on your credit report.
- You’ll need 2 forms of identification, such as a driver’s license, Social Security card, or passport.
The first step in the mortgage application process is pre-qualification. We can help with that.