Do You Qualify for a Loan?

Like most people, you will probably wait until submitting a purchase contract on a home before applying for a mortgage. By then, not only will you cognize the specific property you want, but also how much you need to borrow. At that point, the lender will necessitate that you fill up out a loan application and uncover specific information about your current and past financial situations.

The following checklist is a good topographic point to get for assemblage the information you will need:

Original purchase contract (the loan officer will make a transcript and tax return the original to you)

Copy of earnest money (deposit) cancelled check

Employment history details

Last two years’ W-2 forms

Last two years’ income tax returns

Paycheck stubs for past 30 days

Verification of secondary income (for example, investing accounts, bonuses, a part-time job, kid support or societal security income)

Assets: Account numbers, balances and subdivision addresses

Checking

Savings

Stocks/bonds (current market values)

Debts: Account numbers and addresses

Auto loan(s)

Boat loan(s)

Student loan(s)

Credit card

Other

Explanation of any credit problems (for example, previously declared bankruptcy, excessive credit card debt)

Divorce or separation written documents (if you have got or pay maintenance or kid support)

Landlord’s name and phone number (if renting)

Disposition of present home (if you already have a home, do you be after to sell it or rent it out?)

Person who will give lender access to lender’s valuator (name and phone number)

Your check for appraisal, credit report and/or loan application fees (your lender will supply the cost information)

Pre-qualifying vs. Pre-approval
If at all possible, it is best to begin the loan approval procedure before you happen the home of your dreams. Otherwise, you may hit a barrier when you apply for a mortgage and the application is denied. If the marketer have other buyers waiting, or needs to sell quickly, you may lose your opportunity for that peculiar property.

There are two ways to assist avoid this scenario:

1.) Become pre-qualified for a loan: All you need to make is talk to a lender, who—based on asking you some inquiries about your finances—offers Associate in Nursing sentiment of the loan amount you are eligible to borrow. The lender doesn’t inquire for any encouraging paperwork to confirm what you say, and can change his or her head when you come up back to apply for a loan. There’s no charge for pre-qualification.

2.) Become pre-approved for a loan: This procedure is more than composite and sometimes affects a fee. The lender will desire information about your employment, income and debts to turn out that you are a good risk.

Obviously, a lender’s pre-approval missive carries more than weight with a marketer than a pre-qualification missive because it is cogent evidence of your purchasing powerfulness on paper. Being pre-approved gives you an advantage when you’re among respective buyers pursuing a property.

Pay off other loans.

If at all possible, see paying off any high-interest loans before applying for a mortgage. The more than debts—like car loans or credit card balances—that look on your mortgage application, the smaller the loan amount the lender will be willing to offer.

Don’t pulling a Pinocchio!

Never blow up your income or prevarication about employment dates. Not only is it illegal to distort documents, it’s also a federal offense! And lenders can usually catch people who lie or greatly exaggerate information on their applications. If you lie, you will most likely get what you were trying to avoid all along, a denial for your loan.