Why is pre-qualifying so important?
Many experts agree this is the most important step in the entire
process and can go a long way towards reducing (or even
eliminating) the levels of heartburn associated with buying or
financing a home!
In fact, going through the pre-qualification process before
you start your search for the perfect house will not only save you
time, but give you a realistic idea of how much cash you'll need
to come up with for a down payment, how much house you can
actually afford and what your (approximate) monthly payment will
end up being.
No Tire Kickers Wanted
Most real estate agents and home builders won't treat you as a
"serious" buyer without a Pre-Qualification letter from
a credible mortgage company like W.R.
Starkey Mortgage. Having one of these
Pre-Qualification (also known as Pre-Approval) Letters in hand is
like walking in to a seller with a blank check. It's their
assurance that you're a serious buyer and will be able to close
the deal if both sides can agree on a price and any conditions.
Step One...Documentation
W.R.
Starkey is the industry leader when it
comes to making the mortgage process low-stress. Their commitment
to integrating the technology of the day (of course I'm referring
to the Internet!) not only makes it simple for you, but really
expedites the entire process. They're the best at what they
do...but sooner or later, you're still going to have to provide
them (as you would any mortgage company) the necessary documents
and other key information in order to close the loan.
The Uniform
Residential Loan Application (URLA) requires an
assortment of pertinent information in order to put the loan
process ball rolling. Remember: Any information you submit (like
employment, income, assets and investment accounts) during in this
process is going to be verified. Which leads us to...
Dover's Land-Mine Avoidance Tip #1
One of the more frequent complaints I've received over the years
has been from consumers (prospective borrowers) that ended up paying
a higher interest rate or fees at closing than they were originally
quoted. In almost every case, this was a direct result of the
consumer's inability to provide the necessary documentation at
closing. In other words: If you say your household income is
$100,000 a year, you'd better be ready to [eventually] prove it.
Should any part of your financial picture change during this
process, this information must be provided to your mortgage
professional immediately. However you decide to put your names
in title, will be the way you will be required to sign all closing
loan documents. Let's go over the laundry-list of information
you're going to need to provide to the mortgage company
sooner-or-later:
1. Documentation of your assets
that you listed on your loan
application: This current information (last 60 days) will
be required at application and depending on your closing date,
updated documentation may be requested later.
Dover's Land-Mine Avoidance Tip #2:
Make sure you keep all pages of your
statements...regardless of their verbiage.
By the way: Internet
printouts are not acceptable...and any bank computer
print-outs you submit should be certified by the bank's personnel.
(These aren't difficult to obtain; the banks do it all the time!)
All asset/investment statements you submit should include the
company name, date of the statement, the type of account, account
number, account holder's name, and the current/ending balance.
Additional assets would include:
Retirement income,
IRAs, CDs, Bonds, and insurance policy(ies). (Remember, all
pages are required.)
If you own (or
will be selling or renting real estate), be ready to provide:
- The mortgage company name, number, and loan number.
- The current market value, monthly mortgage payment and loan
balance due.
- If you're selling real estate, a copy of the executed Settlement
Statement from closing to be provided along with a copy of the
bank deposit receipt reflecting the amount of the sale proceeds.
- If you'll be renting real estate, a copy of the executed
Rental/Leasing Agreement reflecting terms and monthly rent will be
required.
- Other assets that may increase your asset value such as
household furnishings,
recreational motor vehicles, collections etc. can be included.
By the way (and from they
weren't born last night file): If any large
deposits are included in the compilation of documentation, a
written explanation of the source of the monies will be required.
This written explanation is for ensuring that you have not
incurred any other debts since the time of application.
All of this information will be
reviewed pretty closely. They're going to want
to know where you're coming up with the cash for your down payment
and any closing costs/fees. Gift monies guidelines vary depending on
the servicing lender program. Prepare to back up their origin with
written documentation: A copy of the check or wired monies "Fed
Funds Wire" Number, and a copy of the bank deposit receipt
reflecting the same amount.
2. An executed sales contract:
The contract needs to be signed by the Seller, Buyer, the
Realtors...and all need to be endorsed by the title company. Any
referenced addendums and/or attachments also need to be included.
3. Custom/waiting-to-be-built home
finance situation: If the house you're purchasing is of
the "to-be-built" variety, you'll need to include a set of
plans and specifications. (This information can be provided by the
builder.)
4. Legal description:
You'll need include a complete mailing and legal description
of the property...as well as it's age.
5. Agent info needed: The name,
address and telephone number of buyer and selling agents for access
to the subject property.
PERSONAL INDEBTEDNESS/LIABILITIES/CREDIT
RATINGS
(...and other potential topics that may
cause you discomfort)
If you've had credit problems, you're not alone.
Life happens and it's not the end of the world...it just
means you're going to have a little more explaining to do.
The earlier you disclose stuff like a bankruptcy, judgments, liens
(tax, child support, student loans or others) or any loan defaults
etc., to your personal Mortgage Professional, the easier-and faster-you'll
get through this part of the process.
Gotta bankruptcy in your past?
You'll need to provide your Mortgage Professional with a copy of
the bankruptcy filing. If it's been discharged, bring a copy of
the final documentation you/your attorney received after your case
was successfully discharged.
Judgments, Liens or Loan Defaults:
- If they've been "satisfied" (paid
off/settled), but are still showing up as unpaid on your credit
reports (imagine that), then be ready to provide a copy of
the documentation to prove this up; you're going to need this in
order to get your loan approved.
- If the credit report is accurate and you've
still got these types of legal clouds hanging over you, they may
require these are settled first in order to approve your loan.
The "I need my financing
fast"-Bottom line? There's a direct correlation
between the promptness of your loan approval and your
attentiveness/willingness to provide your Mortgage Professional with
all of the information that's been requested.
