Mortgage & Lending April 24, 2022

An Inside Look at Loan Pre-Qualification for Fairfield County Real Estate

Shopping for real estate can be a stressful process, but there are things you can do to ensure peace of mind.

As you shop for Westport real estate, you might be wondering what you can do to expedite the process of going under contract on a home. And before you put in an offer on Fairfield real estate for sale, you’ll want to make sure that you’re able to afford the purchase.

One easy way to do this, which can be done before you even find a house, is to pre-qualify for a loan. This acts as proof that a lender thinks you’re a good candidate to formally apply for a loan. Some homeowners may expect to see that a potential buyer is pre-qualified before they sign a contract to sell you the house. If you’re new to home buying or have never had experience in this area before, don’t worry. In this article, we’re going to walk you through exactly how you can do this.

Listed below are things you’ll need to do to pre-qualify for a home loan. As you read, keep in mind that there’s a difference between pre-qualifying for a loan and being pre-approved for a loan. While pre-qualification doesn’t guarantee that you’ll be able to borrow the full sum, it gives you an idea of what you can afford so you’re not wasting your time looking at houses that are ultimately out of your price range.

Talk to an experienced lender

There are plenty of resources and websites out there that pre-qualify individuals for mortgages. However, there’s a greater benefit of talking with an experienced lender in person as they will know your unique situation and personalize what questions they ask you. They will be able to help you get the process for a loan pre-qualification started, and as this is a business relationship, you’ll want to go in and ask what their typical guidelines are for lending and at what amounts to ensure it’s a good partnership. In your initial meeting, you can also ask if you’re a good candidate to qualify for a loan and, if you aren’t, what you can do to improve your position or your application.

Know your credit score

Your credit score will largely affect your ability to qualify for a loan, along with what sort of rates you may be eligible for. If your credit score is lower than you’d like it to be, you might want to hold off on shopping for Westport real estate until you’re able to raise your credit score to a more desirable level. There are strategies that can help you improve your credit score. Also, if you’re worried that checking into pre-qualification will hurt your credit score, no need to worry. In most cases, pre-qualification will not affect your credit score in a negative way.

Be ready to prove your income

Anytime you get a loan, whether it’s for buying a new home or investing in your business, you’ll be asked to show how much income you have coming in on a regular basis. This acts as insurance for the loan company and proves that you’ll be receiving the funds necessary to pay back your loan. For most people, this will be in the form of a W-2 or a pay stub, but a bank statement may work in many cases as well.

Provide employment verification

In the same vein as proving your income, this assures the lender that you’ll have the monetary means to pay back the loan on a reasonable schedule. They may also ask to see tax returns from the past two years to verify income history.

Know the different types of mortgage loans

Not one mortgage is created the same. They differ in terms of how long you’ll make payments, how much money you’ll put down, and what the contingencies are. Your lender should be well-versed in these different types of mortgages and able to answer whatever questions you have, along with helping you decide what type of mortgage is best for you and for your situation.

Don’t be afraid to ask questions

Since you’re early in the process, it’s the perfect time to consider various options and ask questions. It’s better to have your questions answered now as opposed to being surprised or blindsided by something later, especially if you’re already in communication with the homeowner or their agent. With your questions answered, you’ll have more time to plan and prepare for all possibilities before putting in an offer on Fairfield real estate for sale. You may not be sure what questions you should be asking, and that’s okay, too.

Use an experienced agent as another resource

Lenders are a fantastic resource, and you should make sure to find one that you trust and communicate regularly with them throughout the homebuying process. But buying a home is a big deal, and you probably want a couple of people in your corner. Another great resource to have is a trusted agent. While real estate agents don’t work directly in pre-qualification for loans, they have experience in this area that can be invaluable, especially for new homebuyers who are just starting to navigate the real estate market.

Receive a pre-qualification letter

Once you’ve gone through the process of pre-qualification and have been approved, you’ll receive a letter that states how much you are pre-qualified to borrow. You’ll want to make sure you hang onto this paper, as it’s not only helpful for your knowledge but for the sellers as well. They might ask to see your pre-qualification before the contract is signed to ensure payment.

Ready to look at Fairfield real estate for sale?

The process for pre-qualification of a loan is easier than you think. Your lender will be able to walk you through the entire thing step-by-step. And once you’re pre-qualified and ready to start looking at Westport real estate, Julie Walsh has a wealth of knowledge and experience about Fairfield real estate for sale that she’s ready to use. Contact Julie Walsh today.