Why You Need A Pre-Qaulification Letter:
A pre qualification letter verifies your ability to purchase a property that you are aiming for. This verifies that a responsible lender has taken a good look and drawn a conclusion about your home-buying ability. Obtaining a pre-qualification letter may be instantaneous (particularly online), or it may take up to 48 hours, depending on bank bureaucracy. The holders of “pre-qual” letters have at least walked into a bank or gone online and answered a few questions about their financial situation.
Your assets, income, and debts are actually verified by the lender. Having a pre-qual letter is not binding. It is not a mortgage commitment nor a guarantee of credit. Banks know your situation might change between now and closing time.
A pre-qual gives you leverage when negotiating with sellers. You as well will feel more confident knowing what you can borrow and buy. In today’s market, you are expected to provide a pre qual letter along with your offer when bidding on a property of interest.
The letter can be written in one of two ways. It can state the maximum purchase price you the lender states you may be qualified for, addressed “To Whom It May Concern.” Or it can be addressed to the specific seller or his agent, stating your qualifications to pay a specific amount for the home. The latter approach is more personal and often more powerful, if it works.
Eventually expect to supply the following information when you are at the point of applying for your loan:
- Two years of tax returns complete with the W-2 forms verifying your income.
- Your most recent pay stub, showing you’re still employed.
- At least two recent monthly bank statements.
- Verification of other sources of ongoing income such as alimony, child support, or a second job.
- You’ll also need a signed authorization for the lender to order your credit report, although for this, the bank will make it easy with a form for you to sign.
- If you are purchasing the property with your partner or spouse, be aware that both parties will need to provide their individual necessary information.
Note: When purchasing a property in Hawaii. It is highly recommended to use a “local” lender who has their underwriters located here in Hawaii. There are some specific laws that are exclusive to Hawaii. Having a local lender will give you the advantage of having a smoother transaction because of these points.
I am happy to provide a list of reliable local lenders that I have worked with successfully through the years. They are seasoned, and highly experienced that will deliver.