Home Loan Qualification - What you need to know

Before you begin looking for a new home, a second home, or an investment property, it is always a good idea to get prequalified by your lender (Note: this is different than being preapproved).

Prequalification:
1. Saves you time – you don’t spend your time looking at homes that are out of your price range.
2. Gives you an advantage in the marketplace – many sellers will only allow their property to be shown to prequalified buyers.

Your Credit Score - Value Rating - Paper Rating
720 and up - Superior Rating - A Paper
680 to 720 - Excellent Rating - A to B Paper
640 to 680 - Very Good Rating - B Paper
580 to 640 - Good Rating - Subprime
550 to 580 - Fair Rating - Subprime C
550 and below - Imperfect Rating - C Paper

The following list is for "A" paper (note: different guidelines apply to "B and C" credit)

• Conforming loan amount of up to $417,000 – 1st mortgage loan amount only (can also have a 2nd mortgage)
o Can be owner or non-owner occupied
o If owner occupied, must have 2 months PITI* reserves (Principal, Interest, Taxes, Insurance). This money can be gifted from a friend or relative, but is best if it can be shown as self-saved (seasoned).
o If non-owner occupied, must have 6 months PITI* reserves. This money cannot be gifted!
• Non-conforming loan amount of $417,000
o Can be owner or non-owner occupied
o If owner occupied, must have 4 months PITI* reserves (Principal, Interest, Taxes, Insurance). This money can be gifted from a friend or relative, but is best if it can be shown as self-saved (seasoned).
o If non-owner occupied, must have 6 months PITI* reserves. This money cannot be gifted!

*Sources of PITI funds can be from any combination of these assets: checking/savings, 401K/IRA/SII, stocks/bonds, heloc, and basically anything that can be liquid should the need arise. This excludes credit cards!

What you need to know:
• Minimum required documentation for full doc loan (either initial loan or refinancing loans)
o Last 2 yrs tax returns
o Last 2 years W2/1099 Stubs
o Last 2 months asset statements, all pages
o Current home appraisal within last 6 months (we "Chase" need to order this appraisal)
o Home owners insurance agent’s name & phone number
o 2 yrs work history in the SAME field or relating to job
o 2 yrs address history (does not have to be the same address)
o 3 credit trade lines (credit cards, student loans, car loans, etc): 1 of them at least 24 months old for payment history

• If you’ve filed for bankruptcy (chapter 7 or 13)
o It needs need to be seasoned at least 2 yrs
o It cannot contain any Chase accounts in the bankruptcy, such as credit cards or mortgages
o If you’re trying to refinance, current payments to bankruptcy trustee must be made on time and be current prior to pulling money from refinance
o No late mortgage payments since filing
o Credit Score of 620 (this can vary on a loan amount greater than $417,000, and also depends on the loan program)
o 2 yrs work history in the SAME field or relating to job
o 2 yrs address history, does not have to be the same address
o 3 credit trade lines (credit cards, student loans, car loans, etc): 1 of them at least 24 months old for payment history

If you need help finding a lender, I would be happy to refer you.