Loan Pre qualification vs. Pre-Approval
Many people ask about pre-qualification and pre-approval. In general this is the first step to purchasing a home. It is best to begin with a meeting you a lender before you look for homes. This way when you begin to look at homes you are looking at homes you can afford and you know you will qualify for a loan.
A pre-qualification is when a lender goes over your financial profile, generally over the phone, to determine how much of a home you would qualify for. this is a very basic review of your overall loan qualifying. This is a great start to the qualification process. After the pre-qualification you will have a general idea about monthly mortgage payments and the loan amount you will qualify for. Many lenders stop at this point and encourage you to begin your house shopping.
What I strongly recommend is a pre-approval. The pre-approval process goes into much more detail than the pre-qualification. It will include you gathering a list of documentation so we can carefully review your financial information (what lenders look for) and make a determination as to what loan amount you would qualify for. During this process we discuss loan programs and options to find a loan program that will fit your needs. Once you are pre-approved you will know exactly what loan amount and loan program you will qualify for. When you are ready to shop for a home and you have a pre-approval the real estate agents know you are serious about purchasing a home also when you place an offer on a home the seller and their agent know you are also a serious and qualified buyer. Your offer is given more consideration over someone trying to purchase a home that is pre-qualified or has not met with a lender.
The basic information needed for your pre-approval is:
1. One month of paystubs
2. Two years tax returns
3. Two months bank statements
4. Copy of Drivers license