THE PRE-QUALIFICATION PROCESS
In today’s ever changing mortgage market, it has become more important than ever to at a minimum be pre-qualified for a loan before making an offer to buy a home. Before you even begin your home search it is recommended that you get in touch with a reputable lender to at least get pre-qualified. (Lenders who may be mentioned on this site are listed as courtesy only; you should make your own decision as to which lender to select.)
Pre-qualification means that a lender has reviewed such information as you have provided to the lender that if the information you have provided is complete and accurate you should qualify for a loan. It does not mean that you definitely qualify for a loan.
All offers to purchase should be presented with a “pre-qual” letter. The pre-qual letter lets the seller know that you can afford to buy the house. No offers today will be entertained without one. A pre-qual letter will require some initial documentation from you, the Buyer, but this process takes a minimal amount of time, and can usually be accomplished within 24 hours. Having the per-qual letter means the process to get a loan has begun but is not over.
There should be a Financing Contingency for approximately thirty days in the Purchase and Sale Agreement. Some lenders can move faster than that. Work with your Realtor on the precise time for this contingency.
Your lender should make sure that you have the lending product that best suits your financial situation and future plans.
There are many types of mortgages, too many to cover here. Which one you select depends on your situation, your future financial prospects, your future plans and more. You may even want to consult with a Financial Adviser before making a final decision. In today’s market some loans can be traps with consequences that you may not fully understand.
Today the credit rating is important but not all-important. Even with a good credit rating, the lenders are looking for much more documentation, lots of it! If you want that house and need a loan, it is more important than ever before to be working with the right lender.
There have been many changes in the underwriting process for a mortgage. If you want to borrow money, you have to prove you have a satisfactory payment history. This applies to applications for a mortgage, car loan, or credit cards.
In the mortgage process, the most important is showing on time payments for your housing. If you rent from an apartment complex, it can be documented with a verification of rent. If you rent from an individual, you must be able to document that payment history, Ideally, payment by check is preferable, at minimum payment would be by money order. The worst is paying CASH. In some cases cash is king but not when you need to document a housing payment!
If you have been thinking about a home purchase, make sure you can document your rental payment history.