What Does Getting Prequalified For A Home Loan Mean?
Most sellers will not accept an offer unless you are pre-approved and what does getting prequalified for a home loan mean? A pre-approval letter from a bank or a lender shows how much they will lend you. Getting pre-approved for a loan helps establish your price range and how much you can afford. It also shows the seller your offer is serious.
Documents to Gather for Mortgage Loan Application
What are the requirements for writing a Purchase Offer when I find the house I want?
Also, when you make an offer it is customary to also include an earnest money deposit. These deposit amounts vary between areas of the country and the amount of the purchase price. A general rule of thumb is to estimate about 1% of the offered price. The earnest money is usually given to your title company via wire transfer at the time of offer or as soon as possible thereafter. Don’t worry- this money sits in a third party escrow bank account until your closing day and is then credited back to you at settlement towards the money you bring to closing.
If you are making an offer on a foreclosure property (REO or real-estate-owned) you may be required to submit a certified check rather than a personal check. If you are paying for your home in all cash the seller may require proof that you have the funds available to close. This could be satisfied by providing a copy of a bank or stock statement. Ask your agent for more details on your specific situation.
Here they are again:
Gather all of the following documents before you meet with your loan officer. Just to be safe, make sure you don’t pack these as you prepare for your move since your lender may ask for additional documents during the application process.
- W2 forms from past two years
- Pay stubs for the past 1-3 months
- Personal tax returns for the past two years
- If self-employed:
Business and personal tax returns for the past two years
Year-to-date profit and loss statement
Year-to-date balance sheet
Credit Rating and History
- Credit report
- Credit score
Note: Your loan officer will pull a copy of your credit report and score. But it’s a good idea to check them ahead of time. You can get your credit score or credit reports online for free from sites like our partner Credit Karma.
Names, balances, & account numbers for all:
- Credit cards
- Student loans
- Car loans
- Store lines of credit
- Other consumer debt with recurring monthly payments
- Alimony payments
- Child support payments
- Divorce decree
- Documentation of down payment, such as a previous two month’s bank statements (all pages) showing account balance for checking and savings accounts
Investments and Other Assets
- Two months of statements (all pages) reflecting stocks, bonds, or other investment accounts
- Retirement account statements (401(k), IRA)
Residence History for Previous Two Years
- Name and phone number of landlord (if renting)
- Current mortgage documentation (if you own a home already)
Want more homebuying advice? Nestiny is a great place for homebuyer education and to help you gauge how ready you are to buy a home. Journey Homeward allows you to enter all your wants and needs while the True Affordability Tool will break down your budget, showing what you can comfortably afford. You will also receive a Ready Report that will give you a vital head start in the home buying journey, saving you valuable time and money.
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