What You Should Know About Pre-Qualifying for a Mortgage

Homeownership is a dream shared by people all over the world. Knowing, in advance how much home you can afford and how much that home will cost every month can save you much time, effort, and frustration. Why spend time researching homes and visiting homes only to find out afterwards that you can’t afford or won’t qualify for your dream home.Another advantage of pre-qualifying is that sellers are more likely to accept purchase offers from buyers if the offer is accompanied by a statement from a lender that the prospective buyer is able to qualify for, and close on the purchase. In addition, the processing of the buyer’s loan will be much more efficient because the buyer began the paperwork before the contract was accepted.In order to be properly qualified, a prospective buyer will need to provide certain information and documentation to his lender. @ minimum a lender will need the following:

 

• Income information supported by two years, 
• W-2 forms and current pay stubs for all wage earners. 

Self-employed borrowers should provide 2 years income tax returns. This will allow the lender to determine accurate income upon which to calculate a monthly mortgage payment.

Documentation for assets which will be used for the purchase. This would include all cash and stock account statements and gift information, if a gift is being received. This will not allow the lender to fund the down payment, closing costs, and deposits for prepaid items.

A list of all the borrowers current liabilities including the total amount owed and the monthly payment. The lender needs their information to calculate the maximum monthly payment for which the borrower qualifies.
Other documentation, which should be provided, if applicable, includes divorce decrees, separation agreements, disability and unemployment income and retirement benefits.

This documentation will enable the lender to fine tune his numbers and give the borrower an accurate figure for the purchase price and monthly payment for which the borrower can qualify. This will guarantee that the entire transaction will go smoothly.