Information You Need
It’s so important that the agent you choose to guide you through this journey is your trusted expert and advocate. We have a team of experienced, qualified real estate professionals ready to help you find homes for sale that meet all of your criteria.
When you are ready to get started, call us at 303.666.4300 or complete this short form and one of our agents will be in touch.
PRE-QUALIFICATION VS. PRE-APPROVAL
Prequalification and Pre-approval are often used interchangeably, but they mean different things. Prequalification (often shortened to prequal) is a basic overview analysis of a borrower's ability to get a loan. The borrower's financial information is collected verbally, but not verified.
With a Pre-approval, you submit several financial, tax, and employment documents; as this is a more thorough process. Neither is a guarantee that you'll be offered a loan, although a Pre-approval provides for a stronger and more reliable gauge of loan worthiness. A Pre-approval does not include all the paperwork that a loan will require though. Title work and appraisal (both items will cost you money) will need to be completed or in process when you actually apply for a loan. When you are Pre-approved, you cannot get these, because you often don't have a property identified as of yet to make an offer on. With a Pre-approval, you, the borrower, are being approved for the loan from a financial standpoint. The property itself will still need to be approved once it's identified and your purchase offer has been accepted when you're officially under contract.
So, why would you ever bother to get Prequalified? Prequalification provides buyers a starting place, letting a buyer know if they can possibly get a mortgage loan. It is fast and easy to do. There is no point in going through the Pre-approval process if you don't have the income, assets, or credit score to move forward from a prequalification perspective.
However, if you can get Prequalified for a loan, you should go through the Pre-approval process next. Realtors® and sellers will most likely require this step before going too far along the buying or selling process with you. They want to insure that you can actually get a mortgage loan before showing homes that you may not qualify for, saving all parties time, money, and frustration.
If you provide all the needed information, what could go wrong? Why is Pre-approval necessary? When you get prequalified you might think you have all the information you need.
For example, if you say you think you have $8,000 in your bank account, you are Prequalified based upon that figure. Later you realize that you really only have $6,000, so now you may not have enough assets to qualify for a loan.
However, Pre-approval isn't a sure thing either. If you get Pre-approved based on March's bank statements that say you have a balance of $7,600, but by the time you go through the application process you only have $5,600 showing on your April statement, that may cause difficulty in your loan process as well.
It is critical that you maintain your employment, bank balance, income and credit score during the entire loan application process. Prequalification and Pre-approval are based upon these numbers; should they change, so does your eligibility.
The first step will be to get Prequalified for a loan, second step is to get Pre-approved. Then shop for a home based on the amount you are Pre-approved for, and then apply for the home loan once you have an accepted offer and are under contract. If you follow these steps, it will save you a lot of time and aggravation on the mortgage loan process.
When you're ready to begin your loan application, you're going to need some documentation to provide to your lender; be sure to provide originals unless otherwise noted. It's a good idea to start gathering these documents in advance and identifying where they're at so they can be easily retrieved for your lender to review. Even if you don't think you'd be eligible for a loan, moving forward with a lender in this process will definitively identify your loan eligibility and financial areas that need improvement. Your lender will work with you in developing a plan to get you to a point of eligibility, and is a powerful resource and partner for you in attaining that goal.
- Sales Contract on the purchase of your new home, when finalized
- Copy of Sales Contract on the home that you’re selling. This only applies if you’re selling your previous home to assist in paying for your new home
- Original Paystubs for the past 30 days that show year to date earnings, your name and Social Security Number
- Most recent 2 years tax returns with all schedules
- Most recent 2 years original W2 forms
- Most recent IRA/Keogh/401K/Profit Sharing Statements
- Award letter and copy of most recent check for Social Security, retirement, or disability
- Year-to-Date Profit and Loss Statement/Current Balance Sheet if you’re self-employed
- Residence History for the last 2 years of your past addresses and dates
- Statements on all recent outstanding loans and credit cards
- Bank statements for all accounts, bringing 2 months documentation to prove the source
- Transcript or Diploma if you were a student in the last 2 years
- For real estate you currently own, bring addresses, loan information, and leases if applicable
- Landlord’s name, phone number, address, and cancelled rent checks for past 12 months
- Relocation agreement if you’re being transferred into the area by your employer
- Bankruptcy papers including schedule of creditors and discharge papers if applicable
- Check for appraisal and credit report fees