There are a lot of important steps in buying a home: narrowing down your search, bouncing around to open houses, navigating the closing process. But none of those are quite as vital as figuring out your finances. That’s where pre-qualification comes into play!
Pre-qualification (similar to pre-approval) is the process where a lender reviews your finances with a fine-tooth comb and figures out exactly how much you’ll be granted for a loan. It helps set your budget without you having to do any of the number crunching!
If you’re getting ready to buy a home, here’s why you should get pre-qualified before you start your search.
You’ll Know Exactly How Much You Can Spend
Imagine you kick off your home search with a rough idea of your budget and find the perfect home that checks off almost all of your boxes… only to discover, when you apply for a loan, that you don’t qualify for as much as you’d guessed. Not a very encouraging start to your home-buying journey, huh?
When you get pre-qualified, you’ll know exactly how much you can spend before you even start looking. Not only will this save you the heartache of giving up a home you loved, but it’ll also save you a lot of time during your search. You’ll know your boundaries right away and have no reason to look outside of them.
Sellers Will More Seriously Consider Your Offer
These days, it’s becoming more and more common for sellers to not even consider offers from buyers that haven’t been pre-qualified or pre-approved. In fact, sometimes even buyers agents won’t even work with buyers who haven’t completed the process!
Why is that? Well, pre-qualification shows that you’re serious about your offer, and you can put your money where your mouth is. Sellers are probably on a timeline to move, and they don’t want to deal with roadblocks further down the road.
Any Issues Can Be Dealt with Beforehand
During the process of pre-qualification, a lender will take a deep dive into all aspects of your finances—credit score, income, outstanding loans, you name it. So if anything doesn’t look the way it should, they’re going to let you know.
It can be intimidating to open up your financial situation like that, but it’s going to save you a lot of stress in the long run.
What You’ll Need for Pre-Qualification
Since pre-qualification is an in-depth process, the lender’s going to need a hefty stack of documents. This includes:
- Income information like pay stubs, tax returns, W-2s, and records of any additional income.
- Asset information like investments, cash gifts, real estate, and other high-value things.
- Personal documents like your driver’s license and/or passport and your Social Security number.
Get Started on Your Home-Buying Experience
Pre-qualification typically takes from a few days to a few weeks, and once everything is good to go, it’s time to start your home search! Our team offers a variety of resources like buying guides and a specialized search tool made to make your buying journey easier.
If you have any questions about pre-qualification or buying a home, or you’re ready to get started, don’t hesitate to give us a call!