6 Essentials to PreQualify for a Home Loan

prequalify for a home loan

One of the first steps to take as a potential home buyer is to get pre-qualified for a loan. This step helps both you and your lender learn just how much home you can afford. It is best to begin this process before you even start looking for a home.

According to the Federal Housing Administration (FHA), their pre-qualification essentials include:

* Having a steady employment history, at least two years with the same employer.

* Consistent or increasing income over the past two years.

* Credit report should be in good standing with less than two thirty day late payments in the past two years.

* Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.

* Any foreclosure must be at least three years old with good credit for the past three years.

* Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.

Other lenders' ideas regarding pre-qualification are all similar to those outlined above. A mortgage lender will look at your credit report, earnings, debts, and savings in order to see how much home you really can afford.

Why is this important?

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