In many cases, prospective home buyers truly have no idea how much they can afford in mortgage payments each month. For this reason, prospective home buyers may spend a significant amount of time and energy searching for homes that are well beyond their price range. This can result in great disappointment. Before prospective home buyers begin looking at homes, it may be beneficial for them to meet with a mortgage lender. During an initial interview, a mortgage lender can assess the home buyer's financial situation and help home buyers ensure they are looking in the correct price range. In order to accurately evaluate a home buyer's financial circumstances, a lender will need verification of the home buyer's income and long-term debts. Home buyers can help this process go more smoothly by organizing important documents prior to the initial meeting with the lender.
Documents a Lender Will Need
There are several documents that a lender will need in order to assess how much home a borrower can actually afford. A purchase contract for the home a borrower wishes to purchase will be helpful if the borrower has already found their dream home. If a borrower does not have a purchase contract, this will not be a problem. Lenders will want to review a borrower's checking and savings account statements for the past three months. Borrowers will want to be sure to bring their bank account numbers with them along with the address of their bank. Pay stubs are essential as they help lenders verify that the borrower is employed. Along with pay stubs, borrowers may also want to bring W-2 withholding forms, tax returns from the previous two years, or other proof of employment or verification of income. Credit card bills, balance sheets, and gift letters should be submitted to the lender as well.
Evaluation and Loan Qualification
Organizing documents prior to the initial meeting with the lender will help the lender complete the loan qualification process more quickly. The evaluation process can take between 1 and 6 weeks; therefore, having all of the required information at the beginning of the process is crucial. The sooner the information is provided to the lender, the sooner the borrower can know their loan status. After the initial meeting with the lender, a borrower will have a better understanding of whether or not they qualify for the size of the loan they were hoping to secure. If the home buyer qualifies for the loan, the loan application process can begin. All of the information submitted to the lender will be verified for loan approval, and the lender will contact the borrower regarding the outcome of their loan application. If a borrower is denied a home loan, a lender will explain the reasons for the denial. They will also take time to discuss any other financing options available to the home buyer.
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