With the increasing amount of work needed to obtain financing, a home buyer can not make an offer on a home without providing the Seller a letter from a reputable Lender stating that you are pre-qualified for a loan. Sellers who are represented by a good Listing agent will require this pre-qualification letter be presented with any offer being made on their Seller’s home.
Put yourself in the shoes of the Seller. Would you want to pull your home off the market without reasonable assurance that the buyer’s financing is solid?
After a brief phone conversation or online application, a Lender can give you an estimate of how much home you can afford, so that you can begin shopping. But you will need to gather the following to provide your Lender in order for them to prepare a pre-qualification letter.
- Recent 2-months’ bank statements
- Recent 2-months’ pay-check stubs
- Last 2 years’ tax returns
Once you supply the required information, the lender will be able to give you a pre-qualification letter which says based on your current financial status at this moment in time based on the info they have collected so far, you are capable of purchasing a property.
Now, if you shop for six months, you’ll obviously need to provide the lender updated bank statements and paycheck stubs, but this will get you started. Also, while the lender has already collected some information and given you a pre-qualification letter, this does not mean you are guaranteed the loan. They will want to check several other things like a home appraisal, possibly an inspection of the property, or other items in order to solidify their decision to give you a loan. This does not need to happen before you submit your offer, but will be required before purchasing a home for sale.
Also your Lender will advise you what to do (or what NOT to do) during the qualifying process, such as not opening new accounts or paying down certain accounts. Each circumstance is different, and a good Lender will walk you through this. While you may think you have more than enough credit and cash to purchase the new furniture & entertainment system for your new home, doing this before you own your home could cost you the ability of being able to purchase.
I strongly recommend that you use a local Lender and if you need help picking one give us a call for a referral of a reputable and reliable Loan Specialist.