The homebuying process can be an exciting one, but potential homebuyers might not realize the critical role a loan pre-qualification can play. Getting pre-qualified for a home loan before you fall in love with a home can benefit you in multiple ways. It gives you solid numbers to work with showing you what you can afford, gives you an idea of what a financial institution might approve, and provides an estimate of how it impacts your monthly budget.
Steps for Getting Pre-Qualified for a Home Loan
Getting a pre-qualification for a home loan does involve a few extra steps though, but the additional effort can keep your home search on track for affordability. Steps for pre-qualification might include:
- Gather your documentation. The first step involves gathering all the documents a lender may need when you submit an application. You’ll need this information for anyone listed as an applicant. Documentation typically includes your Social Security Number, tax returns, proof of income, and any assets, such as checking, savings, or retirement accounts, include the statements too.
- Understand your credit score. Prior to a pre-qualification, it’s wise to know what’s reported in your credit profile. Not only does it help you understand how lenders see you, but if you spot an error then you may have time to have it corrected, or time for improving your credit profile.
- Prepare your finances. Your debt-to-income ratio, or DTI, is a critical factor all lenders review. It’s the percentage of your gross monthly income spent towards debt payments. In addition to knowing your DTI, review how much of a down payment you will have including closing costs you may face.
Come see why our mortgage experts at PNB of Kewanee go above and beyond to help their customers get into the right mortgage.