First Home Buyer FHA Loan Prequalification Tips

By August 11, 2013
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There are few things more exciting than falling in love with a house, especially if you’re a 1st home buyer. On the flip side, few things match the disappointment of missing out on your dream home because you didn’t have the facts about FHA loan programs and can’t secure the mortgage you need. The solution? Get prequalified or preapproved for FHA loans before you go shopping. Then you can focus on the amenities of your future home without worrying about paperwork and home loan rates. Here are some tips on how to prequalify.

1. Connect with a Mortgage Professionalimages (49)

If you plan on securing an FHA Orange County, FHA Los Angeles, or FHA Ventura County loan, your lending professional can walk you through the entire process. He or she will tell you what you need to bring to the table in terms of proof of income, employment status, and other requirements for prequalification or preapproval.

2. Understand What ‘Prequalifying’ Means

Preapproval is different from prequalifying, although some use the terms interchangeably. You can get prequalified in an hour or so, just by giving a lender some financial information. And you don’t even have to stick with the lender who you were dealing with. In some cases, this step may be enough for you to feel comfortable that, once you formally apply for a loan, it will go through. However, to be even more confident that you can secure the first home buyer loan you need, consider taking the extra steps to get formally pre-approved. You’ll generally need to pay an application fee and provide more documentation. Then, your information will go through the underwriting process where your assets, employment, and credit status will be verified.

3. Do the Paperwork

Once you’ve connected with a lender, you’ll need to fill out a mortgage loan application. It will ask you to list details such as your income (from all sources), past and present employment, where you’ve lived, assets and liabilities, and so on. FHA lenders need to be confident that you can afford the loan. Be honest and accurate. If you’re taking the further step of getting pre-approved, they’ll also run a credit check, so make sure you’ve taken steps to clean up any issues on your credit report, such as errors regarding your payment history that could affect your FICO score.

You’ll need to give the lender some supplemental information, such as W2s or 1099s to prove your income. The U.S. Department of Housing and Urban Development also advises bringing: social security numbers, six months’ worth of bank account statements, evidence of assets such as stocks or bonds, pay stubs (and a way for the lender to verify your employment), lists of your credit cards and how much you owe on each, other outstanding loans, and the last two years’ tax returns.

4. Get the Proof

If you’ve decided to take the extra step to get preapproved by a specific lender, get it in writing. You may even be able to lock in an interest rate. Technically, preapproval is still not a promise of a loan. But it does carry a lot of weight with sellers as you negotiate a home purchase. Show the seller (or their agent) a loan approval letter and you’re steps ahead of the buyers who haven’t been prequalified or preapproved.

5. Go House Shopping!

Now that you’re prequalified or preapproved, here comes the fun part: looking for the home of your dreams. Armed with the FHA home loan requirements and your prequalification, you can “shop” with confidence. Your real estate agent will direct you toward houses in your price range, and you can also look online and in newspapers to see more of what’s on the market without worrying that you’re aiming too high or too low.

When you make an offer as a 1st home buyer, your lender or mortgage professional will help you complete the application and, after a successful appraisal and perhaps a second credit check, the bank should approve you and issue a “loan commitment.”

There are programs and loan packages designed to make it easy for the qualified FHA 1st time home buyer to get into the home of his or her dreams, and FHA lenders can help make it happen. Contact your mortgage professional today.