"All I gave the lender who did my mortgage the last time was my social security number and I signed my docs the following week. Now you want my last 2 years tax returns, this is ridiculous! I'm not giving you one more piece of document. Can't your underwriter see I have an 800 fico score and $500K in the bank, oh and I'm putting half down. This is BS, I'm going to use someone else!"
This is an all too common question and reaction when we send our clients their list of needed items required in today's market to get them approved for a home loan. The client I quoted above actually did go down the road to a different lender but came right back because their list was longer than mine.
To put it as simply as possible, the same people (banks/investors) who lent us money 3 years ago just by our ability to provide a social security number and fog a mirror, now have in response to the mortgage meltdown of the last few years created a much more extensive list for approval. Fear and concern play a big role in this as they want to now make sure that your ability to qualify is fully documented, which means more paperwork. When you think about it, this is actually quite logical and should have been the only norm all along.
But before we begin to think this is more trouble than it is worth, let's look at it from a different perspective. Consider this question and statement is posed to you: "Excuse me, you don't know me at all, but can I borrow $250,000 to buy a home? I promise I will pay you back over the next 30 years." What would you ask for in return as a guarantee or satisfaction that this person actually has the ability to pay you back? Would you accept just a credit report and a couple of pay stubs? Or would you want to dig deeper?
I would think that when you stopped and really looked at it from this perspective, ultimately what you would want to show their ability would probably be very close to what we are already asking for. And as a Licensed Loan Officer it took me awhile for this to sink in and begin to look at it from this perspective. As someone who has been in the mortgage business over 6+ years now, believe me I miss those parts of the old days too. It is significantly easier on our end as well to only have to ask for a few things. But when you look at it from a perspective of what would I ask for if it was my money being lent out, the items needed become reasonable.
So I would leave you with this: if you're thinking about buying a home, I recommend meeting with your Licensed Loan Officer FIRST and review your situation so you can avoid any pitfalls or surprises. Knowing the process and the expectations beforehand, combined with a little bit of prep work on your end, will make what is supposed to be an enjoyable time go much smoother.
Here's a list of items that may be required from you.
•1. Last 2 years W-2s
•2. Last 2 years Tax Returns Federal only, all pages and all schedules
•3. 30 days of Most Current Pay Stubs
•4. Last 2 Months Checking and Savings Statements, all pages even if blank
•5. Paper trail all large deposits, if applicable
•6. Most Recent Asset Statement, i.e. 401K, IRA, Mutual Funds, Retirement, all pages even if blank
•7. Drivers License & Social Security Card
•8. Name and Number of your Human Resources Representative
•9. Name and Number of your Homeowner's Insurance Agent
•10. Mortgage Statement for All Properties, if applicable
•11. Signed/dated letter explaining all credit inquires, if applicable
•12. Signed/dated letter explaining all derogatory credit, if applicable
•13. Rent free letter from parents signed/dated by parents, if applicable
•14. Homeowners Insurance Declaration page for All Properties, if applicable
•15. Last 12 months cancelled checks for rent payment, if applicable
•16. Name and Number of your Landlord, if applicable
•17. Copy of Cancelled Check from Earnest Money (Front and Back)
•18. Awards Letters, i.e. Disability, Social Security, Rental, Retirement, Pension, etc. , if applicable
•19. Copy of Rental Leases, if applicable
•20. Current YTD Profit & Loss statement, if applicable
•21. Child Support Agreement, if applicable
•22. Copy of Divorce Decree/Separation Agreement, if applicable
•23. Copy of Bankruptcy Filing & Discharge, if applicable
•24. If you are VA eligible:
- DD-214 or Statement of Service
- Drivers License
- Certification of Eligibility
- Name and Address of Nearest Relative
Please remember Lending guidelines have changed in recent months and additional documentation may be required, depending upon your specific situation. We want to help make the mortgage process as simple as possible and following this mortgage checklist will get the ball rolling in the right direction.