Your Lender will determine the amount of mortgage you qualify for and get you Pre-Qualified so you are ready to buy a home
Step 2 Explore Purchase Options
When making an offer to buy a home in Arizona the Seller needs to see you can afford the property. If buying the home with cash you are required to provide a Proof of Funds letter from your financial institute.
If getting a mortgage you will need to submit a Pre-Qualification Form (Pre-Qual or PQ) with your offer. You can fill this out yourself, but it is MUCH stronger, and more likely to be considered by a Seller, if coming from your lender.
Have the Pre-Qual complete before you visit homes for sale, that way you know you are looking within your price range and you are ready to make an offer.
How to get Pre-Qualified?
A lender will review your finances and debt to income ratio, listen to your needs, offer solutions to credit issues, educate you on various loan options and discuss programs that best suit your situation.
Not all lenders are the same so conduct interviews. You'll want to choose one with good rates as well as low fees, one who will be responsive and available when you have questions, and who will get your loan smoothly through underwriting to close on time.
Read Understanding Homes Loans to learn more.
Keep It Steady
Once you're Pre-Qualified for a home loan it's important to keep your credit and financial accounts steady until the home purchase is complete. Every pull on your credit makes a ding to your score and underwriting does not want to see changes throughout the loan process.
- Don't deposit cash into your bank accounts before speaking to your lender
- Don't make any large purchases or leases i.e. no new car, appliances or furniture
- Don't Co-Sign loans for anyone
- Don't change bank accounts
- Don’t apply for new credit
- Don't close any credit accounts
Also, if you are shopping for lenders, do it within a two week period as the credit industry will see all the pulls are similar and only ding you once.
Pre-Qualification vs Pre-Approval
A lender's Pre-Qual tells the home Seller you made preliminary moves to get an estimate of how much you can borrow.
A Pre-Approved Letter is in addition to the required Pre-Qual Form. It will include the homes address as well as the lender making a deeper dive into your finances. Once your lender has spent more time reviewing your documentation of assets, work history, credit, credit history and has a preliminary estimate of the homes value they can give you a Pre-Approval Letter. Together the Pre-Qual and Pre-Approval make your offer stronger as the Seller will see your lender is highly confident you will get the funds to buy the home.