Prequalification Checklist for a Home Loan
Ready to buy your next home? As a prospective homebuyer — or as a real estate agent — you want to make sure you know what you need to qualify for a home loan. In order to prepare for this huge step, here is a home loan prequalification checklist.
What Is Prequalification, Exactly?
First, it's important to note that pre-qualification can be a good first step in the home buying process, though it's not required. If you're looking to get a mortgage, you'll want to get pre-qualified by a reputable lender first. This is an easy process, but it's important to remember it's not the same as being pre-approved for a mortgage — though some lenders may use these terms interchangeably. The process of pre-qualification takes a look at your numbers and can give you an idea of how much you may be approved for, though nothing is set in stone.
In order to get prequalified for a home loan, here's what you will need:
- Income: A lender wants to know how much you can reasonably afford for a mortgage given your current income.
- Assets: On top of your income, a lender may want to know how your overall financial health is and know that you can handle a responsibility like a mortgage.
- Debts: A lender wants to know how much debt you have — and look at your overall debt-to-income ratio in order to assess what you may be able to afford.
- Credit: A peek into your credit history can offer a lender an idea of how responsible and creditworthy you are.
The good news is that with this information, you may be able to be pre-qualified by a lender and that this process may take place in person or by phone.
Having a prequalification letter can show that you're really serious about homebuying - and can open doors in the homebuying process and make the mortgage process much easier. It can save you time and a lot of hassle so that you know what you can actually afford.
If you’re ready to buy a home, getting prequalified is an important step to take. You will have a clear idea of your budget when house shopping, and you’ll be prepared to place an offer when you stumble upon your future home. Keep this checklist in mind and contact a mortgage loan officer when you are ready to take the first step.