Mortgage Application Checklist: What You Need to Pre-Qualify

No one can account for every unforeseen obstacle on the path to homeownership. Still, there are steps you can take to keep your home buying adventure on the rails—one of the most critical steps in getting your mortgage pre-qualification letter.

It’s a seller’s market these days. Getting your pre-qualification letter shows the seller that you mean business and can back up your offer. The letter provides details such as the maximum purchase price and the loan amount for which you qualify. It is one of the first things a realtor will ask you for when you begin your search for a new home and something required when you place an offer to purchase a home.

To ensure your mortgage loan and pre-qualification process go as smoothly as possible, it’s important to get all your financial, employment, and personal paperwork in order. Follow our checklist below to make sure you have everything you need ready.

The Nitty Gritty

The mortgage loan application process can feel invasive sometimes, but addressing challenges head-on can save you time and trouble down the line. Be prepared for every corner of your finances and much of your personal info to be evaluated for lending suitability. Don’t hide those shameful credit card bills! Get your documentation in order and develop a plan.

Let’s take a look at what you need, which generally falls into the following categories: who you are, what you own, what you make, and what you owe.

Who Are You?

When it comes to proving who you are to a loan application officer at a bank or other lending agency, this part is pretty straightforward. You’ll need to verify your identity and cover your current housing situation. You may also have to provide some info about your education level and employment status. Have these documents in hand:

• Proper ID: This includes a driver’s license, social security card, passport. There may be other identification requirements with your loan originator, so review your application before beginning.

• Marital status: If you are married and have two incomes that could help your cause, if you are divorced, be sure to have your court-ordered decree and any alimony or child support documentation with you, as well.

• Property tax, mortgage statements, rent check copies: You probably don’t have mortgage or property tax statements if this is your first foray in homeownership, but you may have proof of paying your rent on time over the years.

What Do You Own?

Mortgage loan and pre-qualification officers want to know how much money you bring in each month and how much money you shell out. They want to see if you can afford a loan and are responsible enough to pay it off. Consider your financial documents a record of your money management history. Do you have savings? Do you pay your debts on time?

• Bank statements: Get those checking and savings account statements in order, including account numbers, paperwork that documents your recent balances in each account.

• Retirement, brokerage, or other investment accounts: Do you have a 401k through work or a rollover IRA from an old job? How about a life insurance account that you are using as an investment vehicle? You’ll need up-to-date documentation for those, too.

• Tax info: You’ll need two years’ worth of tax return info when you apply for a mortgage.

• Credit history: If you owe anyone money, you’ll need the names, addresses, and amounts. If you’ve ever declared bankruptcy or foreclosed on a property, you should ask your loan officer if you are eligible.

• Assets information: Do you own your car or other personal property? Did Aunt Millie leave you her apartment in Rhode Island? These assets may help your cause when applying for a loan.

What Do You Make and What Do You Owe?

In this section, we will cover the debts you currently have and the money that you make. Debts come in all shapes and sizes, and, with gig economies, second jobs, and labors of love, there are many ways to pay the bills, too. Read below to make sure you cover all of your bases:

Income

• All your pay stubs, or records of payment, for at least 30 days.
• W-2 forms for all jobs worked in the past two years.
• All personal federal tax returns for the past two years, and if self-employed, you’ll need any business-related tax returns as well.
• Rental property income, if applicable.
• Any social security or disability payments.

Debts

• Credit card: Includer all the most recent credit card statements from your creditors

• Loan payments: Are you paying off a school or auto loan? Include your most recent statement from your creditors for these payments as well.

Things to Remember

Don’t plan any big purchases as you start the loan application or pre-qualification process. Your debt-to-income ratio, or the amount of debt you owe compared to the amount of money you make, is the critical factor in deciding your loan eligibility. In other words, it’s probably not a good idea to plan a trip to Fiji as your loan is processing.

You should also take a look at your current credit score so there are no surprises. If a family member or a friend is helping you with the down payment, you may have to get that in writing, and you may also have to show financials from those who are assisting you.

USALLIANCE Financial’s Home Lending Center is your partner in the home buying process and is here to help you every step of the way. From home financing education classes to personal advice tailored to your loan needs. 

Schedule an appointment with an expert from USALLIANCE Financial today to begin your home purchasing journey or to learn more about the mortgage loan application process.