So if you have been shopping for a home, chances are you have submitted information that has been used in "pre-qualifying" you for a home loan. Pre-qualification (also sometimes called a pre approval) is a term used in mortgage loan circles meaning that a loan officer has taken some information from you, the inherent borrower, and made a tentative decision, but not verified much of, if any of it.
Typically in a pre-qualification, the inherent borrower is asked for their group security number, their employment, wage and asset information and the amount of current monthly debt. In expanding the inherent borrower is asked about their general prestige worthiness. This information is then fast worked up and contrasted against industry standards for qualifying prestige scores and debt to wage ratios.
Based on this quick work up the inherent borrower will be told that they pre-qualify up to a sure mortgage loan amount. For example, if the borrower makes ,000 / month this is then calculated to an industry-standard ratio of debt to wage (which can vary depending upon mortgage loan program), for example 36%. So if a borrower makes 00/month they would be pre-qualified at a total debt of 80 (this includes any monthly payments, along with car & prestige card min. Amount; along with the proposed cost of principal, interest, taxes and insurance).
Dependent upon the loan agenda you choose, other factors that may be included in determining your pre-qualification status...monthly residual wage (that wage remaining after paying all monthly obligations and family support), middle Fico score whether or not you are a first time home buyer, if the refinance has a "cash-out" amount requested, whether or not you have had a bankruptcy or foreclosure, how many times you have been late on a mortgage cost and how recently, your wage type and the way you will verify your wage (W-2, tax returns, bank statements, etc). Additionally, property type, property use, loan-to-value ratio (Ltv), purpose of loan all play into the over all quality to qualify for a mortgage loan.
If you are making ready to shop for a home and will be seeking a mortgage loan, it would be a good idea to acquire the following and allow your mortgage lender to present them thoroughly.
If Employed:
Most modern Two Years of W-2's
Most modern Two Years of Federal Tax returns along with all schedules
Most modern pay stubs surface 30 days
Most modern monthly bank checking and savings statements (include all pages/even blank pages)
Most modern monthly venture catalogue statement (include all pages)
Most modern 401K/ Ira/ Cd statement (include all pages)
If Self Employed
Most modern Two Years of Personal Federal Tax returns along with all schedules
Most modern Two Years of business Federal Tax returns along with all schedules
Most modern 60 Days bank checking and savings statements (include all pages/even blank pages)
Most modern 60 Days venture catalogue statement (include all pages)
Most modern 401K/ Ira/ Cd statement (include all pages)
Year to Date profit and Loss Statement
If You Own Rental Properties
Rental Lease for a minimum of 12 months if you will be renting your current property
Copy of most modern property tax statement
Copy of most modern homeowner's guarnatee notification page
Copy of most modern Hoa statement if applicable.
Do's and Don'Ts while your home shopping and home purchase periods.
Do save money
Do send payments on time
Do pay cash for common items
Do keep prestige balances under 50% of prestige limit
Do keep prestige card accounts open even if equilibrium is paid off or zero
Do keep down cost funds in one catalogue with minimal activity
Do Not open new prestige accounts
Do Not take out new consumer loans or other credit
Do Not pay off collections (without consulting your Loan Counselor)
Do Not buy a new car, truck or motor home (wait until after the close of escrow)
Do Not close accounts with a zero balance
Do Not pay down prestige balances or pay off prestige accounts (without consulting your Loan Counselor)
For questions or comments please email hugh@themortgagecity.com
What is a Mortgage Pre-Qualification?