How to Prequalify a Client for a Mortgage

• 1). Gauge the client's willingness to move forward with a mortgage loan. This can be accomplished a number of ways: review multiple options and have him decide upon one; ask about competing offers; suggest modifications to a current loan proposal.
  
  
• 2). Collect all relevant documentation from the "Things You'll Need" section. This will further cement a customer's willingness to move forward. You do not want to waste his or your time -- a customer with weak commitment will hesitate to provide documents.
  
  
• 3). Review the pre-qualification guidelines for your brokerage or mortgage company. Each company has particular and propriety rules governing pre-qualification. In most cases this means: verifying income, employment, credit and home value.
  
  
• 4). Review the application with your underwriter. Make sure the income is in line based on the maximum debt to income ratio (DIR). For example, if your company's DIR limit is 40 percent, and a customer has $5,000 in monthly income and $1,700 in bills (including the mortgage payment), his DIR is 34 percent, an acceptable ratio.
  
  
• 5). Verify the creditworthiness of the applicant. Some companies have strict FICO standards. For example, if a particular customer seeks a 6 percent loan and your guidelines stipulate at least a 690 FICO, make sure this lines up with his credit report. If not, you'll need to reconsult the customer and offer a higher rate or fees.
  
  
• 6). Verify the value of the home. This can be accomplished with a full appraisal (usually not the quickest or cheapest option for pre-qualification) or with an estimated value online. See resources for a estimation site.
  
  
• 7). Reverify all terms with the underwriter and come to a consensus on the loan application. If the numbers are all in line with your company's guidelines, pre-qualify that customer. Call him to let him know the good news.
  
  
• 8). Proceed with the rest of the loan process.