Do You Qualify for a Loan |
By Genesis Font |
|
Like most people, you will probably wait until submitting a
purchase contract on a home before applying for a mortgage. By
then, not only will you know the specific property you want, but
also how much you need to borrow. At that point, the lender will
require that you fill out a loan application and reveal specific
information about your current and past financial situations.
The following checklist is a good place to start for gathering
the information you will need:
Original purchase contract
(the loan officer will make a copy and return the original to
you)
Copy of earnest money (deposit) cancelled check
Employment history details
Last two years W-2 forms
Last two years income tax returns
Paycheck stubs for past
30 days
Verification of secondary income (for example,
investment accounts, bonuses, a part-time job, child support or
social security income)
Assets: Account numbers, balances
and branch addresses
Checking
Savings
Stocks/bonds (current market values)
Debts: Account
numbers and addresses
Auto loan(s)
Boat loan(s)
Student loan(s)
Credit card
Other
Explanation of any credit problems (for example, previously
declared bankruptcy, excessive credit card debt)
Divorce
or separation documents (if you receive or pay alimony or child
support)
Landlords name and phone number (if renting)
Disposition of present home (if you already have a home, do you
plan to sell it or rent it out?)
Person who will give
lender access to lenders appraiser (name and phone number)
Your check for appraisal, credit report and/or loan application
fees (your lender will provide the cost information)
Pre-qualifying vs. Pre-approval If at all possible, it is best
to begin the loan approval process before you find the home of
your dreams. Otherwise, you may hit a roadblock when you apply
for a mortgage and the application is denied. If the seller has
other buyers waiting, or needs to sell quickly, you may lose
your chance for that particular property.
There are two
ways to help avoid this scenario:
1.) Become
pre-qualified for a loan: All you need to do is speak to a
lender, who based on asking you some questions about your
finances offers an opinion of the loan amount you are eligible
to borrow. The lender doesn't ask for any supporting paperwork
to confirm what you say, and can change his or her mind when you
come back to apply for a loan. There is no charge for
pre-qualification.
2.) Become pre-approved for a loan:
This process is more complex and sometimes involves a fee. The
lender will want information about your employment, income and
debts to prove that you are a good risk.
Obviously, a
lenders pre-approval letter carries more weight with a seller
than a pre-qualification letter because it is proof of your
buying power on paper. Being pre-approved gives you an advantage
when you're among several buyers pursuing a property.
Pay
off other loans.
If at all possible, consider paying off
any high-interest loans before applying for a mortgage. The more
debts like car loans or credit card balances that appear on your
mortgage application, the smaller the loan amount the lender
will be willing to offer.
Don't pull a Pinocchio!
Never inflate your income or lie about employment dates. Not
only is it illegal to falsify documents, it's also a federal
offense! And lenders can usually catch people who lie or greatly
exaggerate information on their applications. If you lie, you
will most likely get what you were trying to avoid all along, a
denial for your loan. |
|
|
|
|
|
