How to Get Pre-Qualified for a Mortgage

Whether you’re competing with other buyers in a competitive market or just looking for a smooth path to buying a home, getting pre-qualified for a mortgage can give you a leg up in the often-competitive homebuying game.

What is a mortgage pre-qualification, and how does it differ from a pre-approval?

A mortgage pre-qualification is usually the first step in your homebuying journey. Unlike the more comprehensive pre- approval process, prequalification is an informal discussion with a lender to get things started.

A mortgage pre-qualification will estimate how much you will be able to borrow. Your lender will issue a pre-qualification letter that can be a persuasive tool when you put an offer on a property.

A pre-approval, on the other hand, is a conditional promise from a lender to provide you with the funds for your mortgage. A pre-approval requires you to submit a full loan application and multiple financial documents.

The pre-qualification process will enable you to:

• Learn if you can qualify for a mortgage loan and how much house you can afford
• Gain insights into your financial picture and what you need to do to prepare for a formal approval
• Discover what type of mortgage you might want
• Get the ball rolling with a lender
• Show sellers you’re serious about your intent to buy

Your homebuying team

A REALTOR® is often the first person people contact when they’re ready to buy a home. But your lender plays just as important of a part. Having a local expert in your court who can explore all of your options, identify your opportunities, and walk you through the process is crucial.

When you work with Virginia Credit Union, your mortgage loan officer (MLO) will get to know you, learn about your homeownership goals, and answer your questions. Think of your MLO as your new confidant, and get ready to share financial information. To get started on your pre-qualification, they'll ask about your job, what’s in your checking and savings accounts, and retirement funds. They’ll also ask about your current living situation, a two-year employment history, and your homebuying goals.

What to do before you meet with a mortgage loan officer

Gathering some basic information and materials ahead of time will help get the process going as quickly as possible.

1. Understand your home buying financial goals

A house is often one of the biggest purchases — and investments — we make. Your purchase will be broken down into monthly payments made over the course of many years. It’s important that you’re comfortable with your monthly payment. We recommend a maximum of about one-third of your net monthly income. So, you will want to gather:

• Your current net monthly income
• Your current monthly expenses
• Your long-term financial goals
• Your ideal monthly mortgage payment range

Based on your financial picture and goals, your MLO will walk you through what a payment could look like for you.

2. Check your credit report

Your MLO will pull a credit report as part of the pre-qualification process, but they will not be able to share it with you, so be sure to have a good idea of what to expect ahead of time. Start by requesting your free report from annualcreditreport.com, and consider paying to see your official credit score. Be sure to identify and fix any outstanding issues or potential mistakes on your report.

 Pro tip: If possible, avoid applying for new financing or taking on new debt in the six months prior to applying for a mortgage.

3. Prepare your homebuying funds

Although there are usually no fees during the pre-qualification stage (Virginia Credit Union, for example, does not charge), you’ll want to make sure your funds are accessible as you prepare yourself for homebuying.

Not sure if you have what you’ll need? Brush up on saving for homebuying expenses, and assess if you’re ready to buy a home. (Plus, our MLOs can help you get started!)

4. Gather mortgage pre-qualification documents

A mortgage loan is a large financial transactions for a lender, too. Therefore, they’ll require lots of documentation to confirm that you can pay back their loan. For the initial pre-qualification conversation, remember the “rule of two” — you’ll need to share your two most recent bank statements and two years of employment history.

And while you’re getting that information together, it’s a good idea to consult our mortgage documentation checklist and start tracking down the additional documents you’ll need.

With these steps complete, you’re ready to contact a mortgage loan officer! At Virginia Credit Union, there’s no cost to start a conversation and get pre-qualified.

If you're anxious to get out there and shop for a home with a REALTOR®, your VACU mortgage loan officer can often have you pre-qualified within an hour, setting the stage for success throughout the rest of the mortgage process.