The first step in the homebuying process should always be getting prequalified for a mortgage by at least one reputable lender. What does that mean, exactly, and what’s the advantage? We’ve got all the details on prequalification in our latest Real Estate Basic Training course… Lesson 3: Getting Prequalified.
Everything You Need to Know About Getting Prequalified
Prequalification is actually a pretty straightforward process, one just about any lender should offer. Here’s what you need to know about getting prequalified.
What is prequalification?
Simply put, prequalification is a lender’s review and soft approval of your overall financial situation. The lender will request a few financial documents, which can likely be submitted via fax or secure online upload, then review your credit, financial history, income, and assets.
Upon approval, you’ll receive a Prequalification Letter, which contains an estimate of what you’re eligible to borrow.
Why should you get prequalified?
First and foremost, prequalification verifies that you are actually able to qualify for a loan. It’s the first step to getting approved for a loan, and it’s a great way to quickly identify any potential hang-ups or red flags… before you get too far down the road!
However, this isn’t the only benefit to prequalification. There are a number of others, like showing sellers that you’re a serious buyer—and that you have the funds to back an offer. It’s also a good way to determine what you can actually afford in a home, as well as what you might expect to pay per month for your mortgage.
Where can you get prequalified?
For you as a buyer, a simple phone call to your bank or a recommended broker is all you need to get started. You don’t have to sign any contracts or agree to work exclusively with any lender; in fact, it’s possible to get prequalified from more than one bank or broker.
We recommend starting with companies you already do business with, like your bank or credit union. It’s also a good idea to ask for recommendations for local lenders, since they may be able to offer additional state or county programs that larger companies can’t.
What’s required to get prequalified?
Prequalification is a pretty easy process, and there’s really not too much involved in terms of paperwork. No driving or in-person consultation is required (so no worries about social distancing or leaving quarantine). Your lender should also be able to provide a way for you to securely upload your documents. Alternately, they’ll likely accept faxed documents as well.
What, exactly, will your lender ask you for? Typically, required paperwork includes: a copy of your ID or driver’s license; recent paystubs or other proof of income; statement of assets (like a bank statement); and a signed release form allowing the lender to run your credit.
More Questions About JoCo Real Estate?
If you’re thinking of buying or selling a home in Johnston County, NC, but still have questions, or are feeling uncertain amidst all the upheaval of recent weeks, please do not hesitate to contact The Tina Barletta Team. We’re all about homes, and we’d love to help you on your way to real estate success!