Homeownership is the American Dream for most people and applying for a mortgage is most likely to be part of the process to attain that goal. It is an important step and getting your paperwork in order before you apply can make it easier.
There are fourteen documents that are necessary for a mortgage. The following list is a guideline for you:
1- Credit Reports – you will not need to provide your credit report to your lender, however you should know the information that is stated. If there are any errors on the report you can file a dispute with the credit bureaus and have your report corrected prior to applying for a mortgage.
2- Paycheck Stubs- are one of the first items your lender will want to see. This will show the bank that you are currently working and how much you earn. This is helpful in determining how much you can afford to spend on a house.
3- Bank Statements- another item(s) that the bank will want to see from all your accounts. This will show the lender how much money you have on hand.
4- List of Assets- these documents show assets you have besides your bank accounts.
5- List of Debts- your credit report will show your lender your debts, however the lender might need to verify certain debts or ask about additional debt so they can accurately calculate your debt-to-income ratio.
6- W-2 Forms – for the past two years will support employment of income history.
7- Past Tax Returns –most lenders want to see your two most current tax returns, especially if you are self employed and do not have W-2 forms.
8- Year-to-Date Profit and Loss Statement-required if you are self employed. This lets the lender know how your business is financially.
9- Proof of Supplemental Income- If you are collecting social security, commissions, overtime pay or tips – you will need proof of these earnings.
10-Proof of Rental Income- if you own other properties and rent them out you can use this income toward qualifying for a mortgage. The lender will request you to submit Schedule E form from you taxes or ask for a copy of any leases.
11-Gift Letter- when a family member or a friend “gifts “ you money toward your down payment the lender will require a gift letter from the person that is giving you the money.
12-Cancelled Rent or Mortgage Checks – this will show proof that you have paid your landlord or current mortgage holder on time. Some banks might ask for a residence history for the last two years.
13-Divorce Decree – if applicable – this document will spell out child support and alimony payments.
14-Bankruptcy of Foreclosure Documents – if applicable – any foreclosures or bankruptcy that has taken place within the last seven years must be disclosed during the application process.
Bottom Line – It is always recommended you ask your financial advisor or accountant for advice to make the mortgage process go smoothly.
Keep in mind that whether you are interested in buying a home or listing a home, a Realtor should represent you– this person is working for your benefit and will help you navigate through the buying or selling process. I have thirteen years in New Home Sales and sixteen years in General Real Estate sales!
Thanks and make it a terrific day…………Robin