Getting pre-qualified allows you to understand how much you can afford before you take the time to go find a house. Doing this makes it more efficient on your home search as well as on your emotions. Also, a lot of sellers are not willing to accept an offer without a pre-approval letter in hand. Pre-approval is a ten-minute conversation that you could have with a lender. You can choose any lender or I can recommended one. The lender will be able to tell you what you qualify for in terms of interest rate, sales price, type of financing, and what other options you may have. The lender will ask you certain questions.
Here are a few things you should be prepared for. They’ll ask for proof of income, whether it be pay stubs, checks or invoices for general contracting jobs. You’ll also be asked what kind of assets you have, what kind of cash reserves do you have. Lenders will also look at your outstanding debt. More debt means that you have a higher debt to income ratio. This will affect your interest rate as well as the amount that you can get approved for in terms of financing.
Your credit score will also be looked at. Be sure to keep your credit in the best shape possible. If you’re not sure what your credit score is, you can go to different websites, including Credit Karma, American Credit Score or your local credit card company should be able to tell you. Remember, you need to keep your credit score in good shape through the end of closing.
You’ll also need to tell your lender where you’re getting your down payment money from. You’ll have to prove where the money’s actually coming from and how much you have saved up. Also, be aware that if you are involved in a lawsuit or going through a divorce, the lender may ask the circumstances revolving that situation. These circumstances could put you in some sort of financial jeopardy.