There seems to be a little confusion among consumers when it comes to pre-qualification.  To be best prepared to make an offer on a home, you should be pre-qualified for the purchase amount.  A pre-qualification is usually based on income or credit history and is only a brief snapshot of your financial picture.  You may get many mailers that tell you that you are pre-qualified for a loan up to $xxx amount.  This is usually just a ploy to get you to call in and start dialog with a loan officer.  (I mean no disrespect to loan officers, but it really is a marketing piece with a purpose of lead generation.)  You will be best served talking directly with a loan officer or Realtor early on in the process.  If you do not have any idea who to use as a lender, then your Realtor should be able to give you some good referrals.

A good lender will know the programs available to you.  You will first make an application for a loan.  You will need the following items to expedite the application process:

  • Most current paycheck stub(s) for the past 30 days with YTD.
  • W-2's for the past 2 years.
  • All pages of bank statements on all asset accounts for the last 2 months.
  • Landlord's name, address, and phone number for the last two years of your residence
  • Photocopy of your driver's license(s) and social security card(s)
  • Name address and phone number of your insurance agent.
  • Last two years of tax returns and/or profit and loss.  YTD if self-employed or if commission income.
  • If purchase loan, signed copy of earnest money agreement.

Once you have given these items to your loan officer and he or she has reviewed them and has an idea of the types of loan programs that you can qualify for, then you can truly be pre-qualified.

 
Post is included in group: John L Scott Active Rainers

4 Comments on Home Buyer Pre-qualification

That's exactly right! You are a great resource for your clients.  I wish all Realtors were as informed and savvy as you seem to be...great job!

05/11/2007 03:14 PM by Brad Patshkowski (Heritage Home Loans)

Hi Val,  In your second paragraph, did you mean to say a "good Realtor" instead of a "good lender"?  I feel that a realtor should know what programs are available and a lender better know.  After submitting paper work to a lender I want a committment letter, not a sense of being qualified.

05/11/2007 03:44 PM by klaus nicholson

Good Post Valerie.

Klaus, while it would be nice for a Realtor to know what programs are available, it's not their job to be telling a borrower if they are pre-approved or what type of loan is best for them. They should have a good idea of what programs are available, but they can't and shouldn't be spending their time discussing what's best. That is not their job or expertise.

Even the best Realtor and lender can make an educated decision about the ability of a borrower to be financed, but until the bank has formally extended an offer with all borrower conditions signed off on it really is just a pre-qualification. A good lender will do this while a good Realtor is helping clients find the home of their dreams.

05/11/2007 10:15 PM by Larry Morris, CMPS, Newberg Oregon (NW Lending Solutions)

Brad:  Thank you for your kind words.

Klaus:  A good Realtor will have a good ideaof what programs are available by virtue of the experience of the mortgage brokers that they work with, but unless the Realtor is a also a loan officer, then they could be speaking about things that are not within their scope of expertise.  Loan programs and the criteria to qualify for them are constantly changing.  It serves the client best to have them speak with a loan officer who is constantly educating themselves about the many programs offered.   I do agree with you that a commitment to lend is the best when it comes to knowing where you actually stand with the lender, but it is not necessary to write an offer on a property.  If you are working with a competent lender and have disclosed everything in your financial world to them, then the qualification is enough to get everything rolling.  An actual approval and commitment to lend can take a few weeks to get.

Larry:  I could't agree more with your points.  Thank you for your comment.

 

05/12/2007 12:27 AM by Valerie Harvey, Gresham Oregon Real Estate (John L. Scott Sandy)

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Real Estate Agent: Valerie Harvey, Gresham Oregon Real Estate (John L. Scott Sandy)
Valerie Harvey, Gresham Oregon Real Estate
Gresham, OR
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John L. Scott Sandy

Office Phone: (503) 826-9000 Ext.: 225
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This blog is intended to inform and educate home buyers and sellers in the greater Portland, Oregon metro area. Specializing in the Gresham, Fairview, Troutdale, Boring, Damascus and Sandy, Oregon areas. Please feel free to comment or ask a question.

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