The Home Buying Process Step 1: The Loan Prequalification and Loan Preapproval
The essential first step in the home buying process is a “prequalification” interview with a knowledgeable and experienced loan agent. This important first step will help you set the perimeters of purchase price and monthly costs. You can then make your home buying decision from a position of financial strength, with confidence that you have the ability to complete the purchase.
PREQUALIFICATION indicates an informal interview with a loan agent. The loan agent reviews the information you provide, and makes a statement that you are qualified to obtain a loan.
PREAPPROVAL takes the process several steps further. In a preapproval, the loan agent makes an actual verification of your income, assets and creditworthiness.
To expedite the process, you’ll want to collect the as many of the following documents as possible to bring as you met with the loan agent
YOUR IDENTITY Copy of Driver’s License or State ID Copy of Social Security Card Copy of Resident Alien Card
YOUR INCOME 2 current paystubs (most recent) 2 years W-2s (most recent) 2 years tax returns (most recent) If self-employed – current Profit and Loss Statement
YOUR ASSETS Bank accounts: Name of bank, address, account number, balance Copies of 3 months bank statements (most recent) Stock and bonds, IRAs, Mutual funds (copies of most recent statements) If down payment is a gift – gift letter from donor
YOUR CURRENT DEBTS Creditor’s names, addresses, account numbers, balances due Name, address, account number, and phone of landlord or current mortgage 12 months canceled checks for rent or current mortgage If negative items on credit report, letter of explanation
OTHER REAL ESTATE OWNED Present value Balance due on mortgage: Name, address, account number of mortgage holder