Qualifying for a loan requires speaking with a lender or mortgage broker and finding out what loan amount you can qualify for and the maximum purchase price for a property. A licensed mortgage broker can guide you through the process and recommend different loan programs you might qualify for, such as:
Conventional Loan - as low as 3% down (previously 20%)
USDA Loan - 0% down payment for qualified buyers in rural areas
VA Loan - 0% down, no mortgage insurance - for Veteran's
The mortgage broker or loan officer will look at several key factors to come up with your qualification:
Cash – cash to close & savings
Credit – qualify with as low as 500 FICO score, however Best rates with a 740 or higher FICO Score
Capacity – debt to income ratio
Collateral – subject property value & other assets
It is important to get prequalified with a lender so that you, the lender, and your realtor are all on the same page. This can help to focus on the right properties for you and also minimize problems allowing for a smoother transaction.
Some lenders will issue a pre-qualification letter to the buyer and the buyer’s real estate agent. Other lenders may provide a pre-approval letter. Pre-approval is the same process as pre-qualification but typically means that the lender has gone a step further and pulled your credit. They have also run your credit profile through their automated underwriting system. Not every lender has this ability and you should consult with your mortgage loan originator to confirm.
Below is a typical list of documents that a lender or mortgage broker may ask for
2 Most recent years of Federal Tax Returns (All schedules and attachments)
1 Full month or 30 days of most recent pay stubs
Most recent loan statement for any “installment loan” (ex. Car, Student, Personal, etc.)
a.They will ask about credit card debt as well but will not ask for phone bill, internet, etc.
2 Most recent months of bank statements for any and all accounts
Other documentation (if necessary):
a. Mortgage statement for any properties owned (plus proof of taxes, insurance, maintenance fee, HOA dues, etc.)
b. Certificate of Marriage
c. Divorce Decree
d. Death Certificate
You should consult with your mortgage loan officer for their lender’s specific list. If you would like to be setup with a reputable lender, contact us today.
Jeff Char, License #RB-234684211 Waialae Ave. Box 9050Honolulu, HI 96816