By Shana Fischer
You find your dream home and you’re ready to buy. You’re making design plans, figuring out paint colors and the perfect place for your favorite chair. Then, BAM! You go to get a loan and realize you won’t qualify to buy that dream. This disappointment could have been avoided if you had taken the crucial step of prequalifying.
Prequalifying for a home loan is an important first step in buying your home. It allows you and your Realtor to know what price range works best for you. It can also help you figure out your monthly mortgage payment. And, most importantly, it will help you avoid scenarios like the one above.
To get started on prequalifying, you need to find a lender or broker. Not all lenders are the same. You need to do your homework and make sure you have selected a company or bank that is detail-oriented, understands the process fully, and is thorough. AZ Home Loans specializes in prequalifying. Their extensive process ensures you will know exactly the amount you qualify for and in some cases it only takes a few hours.
To prequalify, you will need to provide:
pay stubs for the last two months
bank statements for the last two months
tax returns for the last two years
your driver’s license
An AZ Home Loans officer will then look over your information and check it for any red flags before turning it over to an underwriter. Jordan Davis, Vice President of AZ Home Loans, cautions not all prequalification processes are created equal. “You can go to a bank or another lending institution and they may only ask for your name and the purchase amount of the house you are looking to buy. They don’t ask for your credit rating or any income data. By skipping these steps, it leads to a lending failure. By the time you find out, you have may have already spent money and time.” It is believed as many as a third of prequalification applications fail because lending institutions don’t follow these simple steps.
Sellers love prequalified buyers. It shows you are serious and have the income and buying power to back up your bid. In cases of bidding wars, it may even give you an advantage.
Being proactive when it comes to buying a home sets you up for a less stressful experience. It saves you time and money. Money you can spend on creating the perfect home.