Mortgage Qualifications

Prequalification

When you're ready to purchase a home, you can prove you're a serious buyer by obtaining a prequalification letter. A prequalification is an evaluation of your creditworthiness based on your income, assets, debts, and past credit use. By evaluating these factors, First Commercial Bank can help you qualify for a home loan and determine how much you can afford to borrow. Prequalification is only the first step in the mortgage process and does not include an analysis of your credit report or your ability to purchase a home.
 

TO GET A PREQUALIFICATION, YOU WILL NEED TO PROVIDE:

• Your identification, including your Social Security Number
• Employment verification: a month of pay stubs, W-2s, or 1099 forms for the last two years
• Bank statements for the last two months

Home loan requirements

Depending on the type of mortgage you are applying for, your home loan requirements could vary. Much like a prequalification, when applying and qualifying for a mortgage, you will need to demonstrate a credit score and debt-to-income ratio that meets lending requirements. You may also need to produce additional financial documents such as employment/income, tax documents, or investment account information. Learn more about mortgage qualification requirements for the various home loans offered by First Commercial Bank.

Financial documents

You can make qualifying for a mortgage easier on yourself by organizing your paperwork ahead of time. While this list is not all encompassing for every loan process, gathering these important documents is a good place to start:

• W-2s for all employment in the last two years
• 1099 forms if you are self-employed
• Pay stubs for the last 90 days
• Bank statements for the last 60 days
• Tax returns for the last two years
• Statements for other sources of income such as dividends, stock earnings, bonuses, pensions
• Social Security or disability income
• Securities documents such as stocks, bonds, and life insurance policies
• Proof of homeowners insurance

Preapproval and your credit report

Your First Commercial Bank loan officer will then work with you to collect all of your documents and put them in order to complete your mortgage application. Your mortgage preapproval will tell you the exact loan amount you are qualified for and is typically good for up to 90 days. Obtaining a prequalification and preapproval before shopping for a home lets you know how much you can afford and helps you move quickly in making an offer once you find your perfect home.

Along with your income, assets, and debts, your history of credit management is an important factor when qualifying for a mortgage. First Commercial Bank will pull your credit as part of the prequalification process. Three national credit reporting agencies continuously monitor your use and re-payment of credit, including credit cards, car loans, and any other short- or long-term loan.

ALL THREE AGENCIES REPORT INFORMATION IN FIVE DISTINCT CATEGORIES:

• Identification—Your name, address, social security number, employer, date of birth, and spouse's name (if applicable).
• Credit history—Current and past payment history of all open and paid accounts. Negative information, such as late payments, can show up for seven years, while bankruptcies can remain for up to 10 years. You should contact the appropriate credit agency and dispute any information you feel is not true.
• Collection—Any creditor who has turned over an account to a collection agency may be listed.
• Public records—Items of public record that affect your finances such as bankruptcies, divorce decrees, child support, and other records are listed.
• Inquiries—Anyone who has checked your credit in the past 18-24 months will be listed.

Avoid problems with your home loan qualification

Because each credit agency has different reporting techniques, and since two or more credit reports will be compared when evaluating your home loan qualification application, you should know what each report contains and correct any errors. You can, and should, dispute any mistakes.