Reviewing the proper documentation can be more important to a reliable home mortgage loan prequalification* than looking at credit. Most people have some idea of their credit and credit requirements. Critical questions which should be addressed early involve employment and address history, income and asset sources, and loan objectives.
Documents should be reviewed completely:
Paystubs – consecutive paystubs identify the employer, pay period, pay type, amount of overtime, consistency of hours works, unusual deductions
W2s – for 2 years, verify work and address history, income earned and that the income is W2 earnings and not contracted income
Full tax returns – all schedules for most recent 2 years, show unusual deductions, other income sources, self employment, other property, dependents
Full bank statements – most recent two months, shows assets for closing, identifies unusual deposits that might require explanation, unusual deductions for undisclosed obligations, name and address information
Driver’s license – name and address information, identity verification
If any of these documents are not readily available, that may suggest the loan approval will be difficult.
Lenders review all documentation thoroughly, looking for any discrepancy. A too quick prequalification is simply not reliable. Asset documentation and pay stubs most frequently can bring unexpected complications during your loan approval process. A good initial prequalification review of your documents is essential for your smooth closing.
*A pre-qualification is not an approval of credit and does not signify that underwriting requirements have been met.