What Do I Need for a Prequalification Letter?
When you’re looking to take the next step to become a homeowner, you’ve probably heard a few things from other homeowners about the process they had to go through to become prequalified for a mortgage. You may even hear stories about how many documents they needed to give the mortgage lender. In this article, we’ll cover some questions about why you need a prequalification letter, how to get one, what you need for a prequalification letter, and how long it takes to receive one.
What Is A Prequalification Letter?
A prequalification letter is not a guaranteed loan offer for a mortgage. What it is is a document from a mortgage that you give a seller stating that the lender is willing to lend you a certain loan amount and that you’re probably able to acquire financing. A seller often requires a prequalification letter before accepting offers on the house.
Why Do You Need A Prequalification Letter?
A prequalification letter means that a lender has verified that you can afford a mortgage loan, either from the lender who prepared your prequalification letter or someone else. Real estate agents also request pre-qualification letters as it saves time and frustration, provides proof that the potential buyer can obtain financing, and it keeps the real estate agent safer, as the lender has done their research on the potential buyer.
When Would You Need More Than One Prequalification Letter?
The only time you’ll need to have more than one pre-qualification letter is if you switch loan programs, such as if you decide that you don’t want a conventional loan and would rather try for a USDA loan. In that instance, you’ll have to acquire a new prequalification letter for a USDA loan.
How Long Does It Take To Receive A Prequalification Letter?
At Equity Mortgage Lending, we can get a prequalification letter for our borrowers within a few hours as long as we have all of the necessary documentation.
What Do I Need For A Prequalification Letter?
You’ll need to gather several documents to apply for a prequalification letter. They include:
Proof of military service (If you’re applying for a VA loan)
Documentation for Retirement, alimony, or child support income
Employment gap explanation
Explanations for large deposits in checking or savings accounts
Reasons for late payments, collections, or negative credit items
Pay stubs for one month
Bank statements for two months. A lender might also want an itemized list of debits and credits
W-2s for two years
If you're self-employed, tax returns for two years.
The prequalification process doesn’t have to be a daunting, stressful time; Equity Mortgage is here to help with an easy and hassle-free mortgage process. We pride ourselves on providing the highest level of customer service and finding the best solutions for those who come to us. Contact us today to get started or if you have any questions.
* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.