How and Why to Get Pre-Qualified for a Mortgage Roger Odoardi Getting Pre-Qualified for a Mortgage is Simple, Easy and Low-Risk If you’re one of those potential homebuyers who are on the fence about getting the process started, the least you can do is get pre-qualified for a mortgage. Pre-qualification is low-risk and non-committal, and most importantly, it gets the conversation started. What is mortgage pre-qualification? A pre-qualification from a mortgage broker is a letter stating the amount you will be able to borrow. It gives you a better idea of just how much you can afford when shopping for a house. It can also come in handy when shopping for a home because it gives a seller a clear indication of whether they are actually able to buy the house or not. Pre-qualification is based on: Credit score (You can still get pre-qualified even if your credit score is poor) Employment and monthly income Debt-to-income ratio Assets Be prepared to offer documentation of all of the above. Without documentation your broker may not be able to verify your information and complete the pre-qualification process. You’ll need the following: Proof of Credit Score – a broker should be able to run this for you (Expert Tip: Don’t apply for any new credit, cancel any current credit cards or make major purchases while waiting for pre-qualification.) Proof of Assets Identification (Drivers license, Social Security card) Last three months of bank statements Two years’ worth of tax information (i.e. W2s, tax returns, etc.) Last two months of pay stubs Why is pre-qualification important? Pre-qualification means you now have the ammunition you need to start looking at houses. It shows real estate agents and sellers that you’re a credible buyer and can act fast if necessary. Pre-qualification also allows you to discuss mortgage options with a broker—it starts the conversation on things like whether a 15-year or 30-year mortgage is best for you, or whether a fixed rate or adjustable rate mortgage is best. Pre-qualification also allows you to know the maximum amount you can borrow, as well as the range you can afford based on your monthly debt. At the end of the pre-qualification process, a lender will give you what is called a good faith estimate, which is a brief document spelling out the likely terms of the loan, including the interest rate, loan type (fixed-rate, adjustable and so on) and closing costs. The pre-qualification process will likely only take between 24 to 48 hours. And if you do get pre-qualified, your pre-qualification letter will typically last for 60 to 90 days. Again, getting pre-qualified is low-risk and non-committal, so why not find out how much you can borrow before jumping into the larger mortgage application process? Next Steps Set up a time to talk with a mortgage broker, either in person or over the phone. Remember this is a non-committal conversation meant to explore your home mortgage loan options. Want to start the conversation? Fill out our application form to have one of our brokers review your information and get back to you with your mortgage opportunities. Roger Odoardi Roger is an owner and licensed Loan Officer at the Blue Water Mortgage office in Hampton, NH. Roger graduated from the University of New Hampshire Whittemore School of Business and has been in the mortgage industry for over 20 years. Roger has originated over 2500 residential loans and is licensed in New Hampshire, Massachusetts, Maine, Connecticut and Florida.