The pre-qualification loan paperwork is the first step of buying a home. Many real estate agents will not even let you look at homes if you don't have the pre-qualification loan paperwork from a reputable bank. Sounds like a lot of trouble, but it's actually not. And you can obtain this easily from local commercial banks like Chase, Bank of America and Citibank.
Instructions
1. The difference between pre-qualification and pre-approval loan paperwork is that the pre-qualification letter from a bank is free while banks charge for a pre-approval. However, the real difference is that a pre-qualification does not actually go through the bank, but is determined by the loan officer himself, so everything is an estimate. The pre-approval loan paperwork is processed by a bank and carries more weight than a pre-qualification when submitting for an offer for a house.
2. So, which one should you get? If you just started looking for homes, pre-qualification loan paperwork is good enough. The process of finding the right home can be very long and the pre-approval is only valid for two months. A pre-approval is more beneficial because it carries more weight when the bank looks at your offer. When a person starts to submit offers, it is better to get the pre-approval from the bank.
3. Once you decided that you want the pre-qualification, it is better to talk to the bank's loan officer and tell him exactly what you want; for example, how much house you want to buy, how much of a down payment you'll pay and what you want your payments to look like. When starting the process, you'll need the following items: last two years tax return; all W-2 tax forms from last two years; all account statements, such as credit card, checking and saving accounts; three most recent pay stubs; a letter of promotion notice, if this applies to your job situation; CDs, 401k, 457 and all other retirement account statements; and identification, such as drivers license.
4. The loan officer uses the information that you provided to see if you pre-qualify for a loan. He should also explain the terms of the loan, points and closing costs to you. The pre-qualification at the bank that you have an account in is completely free of charge to you.
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