Getting Pre-qualified and Pre-approved for a loan


Getting pre-qualified for a loan gives you and idea of how much you can afford as well as loan programs that are available. This takes very little time, is of great value and can generally be done of the phone or at an initial meeting with a loan officer. Some states require that you are pre-qualified or pre-approved before you submit an offer.


Pre-approval is going through the process and actually getting approved for the loan however, it is not the final loan commitment. This requires detailed documentation and if you are approved for a loan you will receive a pre-approval letter stating the lender is willing to give you the loan which is generally good for 60 days.


Some general information that can be required to get pre-approved might include:


Social security numbers/cards of the borrower and co-borrower(s).

Driver's License

Where you have lived for the past two years. If you were renting, the landlord's name, address, and phone number.

Most recent two-year employment history, including income.

W-2 tax forms for the past .2 years.

If you are self-employed: provide 2-3 years tax returns and an YTD profit and loss statement, and other financial statements regarding both you and your company may be requested.

A list of all creditors, including account balances.

Provide two-three months of the most current bank statements for each bank, stock and mutual fund account.

Provide recent copies of any stock brokerage or IRA/401K accounts that you may have.

The value of any other assets you might own, including other real estate.

Gift letter statement. If you have received any money from friends or relatives which will be used towards the purchase of the home.

Most recent pay stubs. (Usually the last 30 days)

Any supporting documents proving claims of additional or supplemental income for sources like: social security, pension, stock dividends interest and such.

If recently divorced you will need to provide a copy of the divorce decree as well as proof regarding any claims of receiving alimony or child support.

If you are not a US citizen, provide a copy of your green card, or if you are not a permanent resident provide your 11-1 or L-1 visa.

If VA loan certificate of eligibility or DD-214 Discharge Paper/ Employee Relocation Client

If previous bankruptcy, copies of petition for bankruptcy and discharge, including schedule.


Why Getting Pre-Approved is Important to Starting a House Search



Many buyers get frustrated when their Realtor asks if they have been pre-approved.  They think, “all I want to do is look at houses, we can worry about the pre-approval later.”  We understand your frustration, but let me help explain why the pre-approval process is so important….

1. A Pre-approval Letter shows that you can buy a house


Unless you plan on buying a house for cash, you will need some sort of financing.  If you cannot obtain the financing, say hasta luego to the idea of buying a home, for now.  There is not much more that is frustrating (to buyers and Realtors alike) than to look at houses for several days only to find out that you cannot obtain financing to buy one.  Therefore, we usually ask for a pre-approval so we can both have reassurance that you can buy a house.

2. A Pre-approval Letter helps define your search


It lets you know what you can spend, so it saves time and energy from searching for houses that you cannot afford.

Think of the emotional drain of finding the house of your dreams and then the bank says that you cannot afford it.  We would rather you not look at those houses that you cannot afford.  If you can only afford a $100,000 house, we need to make sure you are only looking in that price range.  If you look at too many houses outside of your price range, you will not enjoy the houses in your price range as much.  A Ford Focus never looks as good after you drive a Lamborghini.

3. You’ll have more leverage in negotiations with the seller


Having a pre-approval letter really makes your offer look good to the seller of the house.  They are more willing to negotiate with someone who is pre-approved than someone who isn’t.  Plus, if there are multiple offers on a house, yours will be ranked higher due to the fact that you are already pre-approved.  It is less risky for the seller than looking at an offer from someone who isn’t.

4. A Pre-approval letter is better than being pre-qualified


Many banks will give you an informal estimate of what you can afford, and this is known as pre-qualification.  It is not a statement of fact, but rather an opinion.  Make sure you get an official Pre-Approval letter.  This is a statement of fact, and will hold a lot more weight than a pre-qualification letter.  It takes more work to get pre-approved, but it will save you a lot of time in the long run.

We hope this gives you a few reasons why it is so important to get pre-approved.  If you have a hard time starting the pre-approval process, give us a call and we can help lead you in the right direction.