Congratulations on starting your journey to making the dream of homeownership a reality! Applying for a mortgage can be daunting, so preparation is vital. Don’t let the steps overwhelm you; knowing what is needed helps you get one step closer to your dream home. Here at Carolinas Telco Federal Credit Union (CTFCU), we recommend that our members start through the prequalification process. Prequalification makes home offers more competitive and lets you know what you can afford. Gathering this information up front helps us determine the best course of action to get you across the closing line. Let’s start by breaking down some vocabulary you might encounter during this process:
- What is prequalification? The prequalification process helps our mortgage team pinpoint products that might be a good fit for your unique home-buying needs and also allows us to help educate our members on what to expect from the process.
- Who is considered a first-time homebuyer? Someone who has not owned a home in at least three years or more.
- What is an Adjustable Rate Mortgage (ARM)? A home loan with an interest rate that can adjust over time based on market trends.
- What is a Fixed Rate Mortgage? In this type of home loan, your interest rate is locked in for the entire loan term.
- What is a down payment? The sum of money the homebuyer pays out of pocket towards the home’s total price. Review our First Mortgage webpage to learn more about the down payment requirements of our home loans.
- What is the debt-to-income (DTI) ratio, and how is it calculated? Your DTI compares your monthly debt payments to your total monthly income. Our mortgage team uses this number to determine your borrowing risk.
- What is the difference between a soft inquiry versus a hard inquiry on your credit? A soft credit inquiry does not affect your credit score and gives lenders a glimpse into your financial picture. Performing a soft credit check can help lenders begin running the numbers to estimate your credit profile. Conversely, a hard inquiry affects your score and remains on your credit report for two years. This type of credit pull generally occurs when a borrower is ready to submit a complete credit application.
Now that we’ve broken down some key terms you might encounter, let’s dive into what CTFCU requires during the prequalification process:
- If you’re purchasing a home:
- Are you a first-time homebuyer? (Have not owned a home in the last three years)
- Do you have the required down payment?
- Proof of income:
- If receiving income reported on a W-2, 30-days of paystubs showing your recent income
- If retired, provide copies of the most up-to-date Social Security Awards Letter and any Pension/Annuity Income you receive.
- If self-employed, submit the last two years of personal and business tax returns, including all schedules.
- If applying jointly, the other applicant must be a CTFCU member in good standing and provide all the information listed above.
- Finally, choose which loan term you’d like to prequalify for. As of 3/7/23, we offer 10-year, 15-year, and 30-year loan terms.
After submitting all the requested information for prequalification, a mortgage team member will contact you to review everything required to move forward. If you’re ready to start the prequalification process, please visit your local branch or our mortgage page to find the “Prequalify Now” link. When purchasing a home, you can feel confident with CTFCU’s expert mortgage team working on your behalf.
General Disclosure:
Prequalification is given on a case-by-case basis based on several factors, including but not limited to creditworthiness and debt-to-income (DTI) ratio.