In today's market, sellers require or want a professional statement of pre-approval for a loan with every submitted offer they review. If you don't know how to get this letter, the following steps should help you out, or contact me for assistance.
- 1 Get a referral for a lender or mortgage broker from a friend, relative, co-worker or CENTURY 21 Frank Frye Real Estate agent. Schedule an appointment for a sit-down meeting with the lender.
- 2 Be ready to provide the following information: gross monthly income and total monthly payments (car payments, minimum monthly payments on credit cards, child support payments and all payments you have to make every month). Be sure to bring proof of income and monthly payments.
- 3 Get your "ratios." You or your lender can add all your debts together and compare that number to your income to arrive at your total debt-to-income ratio. Your percentage should be under 36 for the best interest rate. The lower the number, the better chance to be approved for a loan.
- 4 Give your lender authorization to pull your credit report. The report should include a FICO (Fair, Isaac and Co.) score, which is the credit scoring system most widely used by lenders. (A credit score is a system of calculating the risk of lending to you based on several factors, including how long you've been at your present job, your occupation, how long you've been at your present address, the ratio of your balances to your available credit lines, whether you are a home owner, the number of recent inquiries into your credit, your age, the number of credit lines you have, the years you have had a credit in the credit bureau database, and such derogatory items as bankruptcy, collections against you, foreclosures and slow pays.) A FICO score of 680 or better is considered "A+" (excellent), and with good ratios and other positive factors should get you the best interest rates available.
- 5 Have a lender prepare a letter of prequalification for you. The letter should state that your initial financial and credit information has been reviewed and looks good, though it will also state that the letter is not a guarantee of a loan.
6 Be sure to ask the lender or mortgage broker the length of time their pre-qualification is good for. Once you know, contact one of our agents at CENTURY 21 Frank Frye Real Estate and they can help you start the search process for your new home!
Documents Needed for a Loan Application
Before aquiring a loan, Mortgage Lenders and bank Loan officers have to have some basic information from you, the buyer. Every bank or mortagage company has different requirements for their loan applications, so be sure to ask them what they need you to provide! Here are a few of the basics:
- Driver's License
- Social Security Card/Social Security Number
- 2 Years of W-2 information
- Paycheck stubs from your last several months of pay
- 2 Years of income tax statements
- Current bank statements of each of your accounts (including CD accounts and investments)
*Self employed borrowers may have a few more financial requirements to provide
This should get you started in the right direction! Be sure to call us here at CENTURY 21 Frank Frye Real Estate if you'd like help finding a trusted Lender in the area!