Loan Aps: What You Need
Applying for a home loan sometimes feels as long, complicated and arduous as astronaut training. While the process is difficult, it shouldn’t prevent you from following your dreams of home ownership. In addition, applying for a mortgage and getting a pre-approval is critical for several reasons. First, you don't want to start the home search process without know how much and what type of mortgage you qualify for. Secondly, a mortgage lender can identify areas where you can improve your credit score and potentially qualify for a better rate. Lastly, in today's real estate market, a pre-approval letter indicates to the seller that you are not only a qualified buyer, but also a serious one!! Now let’s gather our paperwork - this list can vary depending on the lender:
l Previous three months’ bank statements on all accounts.
l Statements for two months on all stocks, mutual funds, bonds, etc.
l Copy of latest 401K statement or other retirement assets
l Explanations for any large deposits and source of those funds
l Copy of HUD1 Settlement Statement on recent sales of homes
l Copy of Estimated HUD1 Settlement Statement if a previous home is for sale, but not yet closed
l Gift letter (for funds from family members); donor’s bank statement; copy of gift check; copy of deposit receipt
l Landlord’s name, address, and phone number (if you rent - for verification of rental)
l Explanations for late payments; credit inquiries in the last 90 days; charge-offs; collections; judgments; liens
l Copy of bankruptcy papers filed within the last seven years
l Copy of Social Security Card l Copy of Driver’s license
l Last two years’ W2 forms
l Most recent pay stubs covering a 30 day period
l Federal tax returns (1040’s) for the last two years, if:
you are self-employed; earn regular income from capital gains; earn sizable interest income; earn more than 25% of your income from commissions or bonuses; own rental property; or you take non-reimbursed business expenses.
l Year-to-Date Profit and Loss Statement (for self employed)
l Corporate or Partnership tax returns (if you own more than 25% of a business) l Pension Award letter l Social Security Award letters
l Purchase agreement copy (if you’ve already made an offer)
l Receipt for child support payments l Copy of Divorce Settlement
l Copies of twelve months canceled checks to document actual receipt of funds
l Copy of your most recent monthly mortgage bill
This may feel like a daunting list, but break it down into smaller pieces and gather over the course of a week. After the last housing bubble, federal regulations have been put into place to insure that lenders are verifying assets, debts and income. However, there are numerous mortgage products out there that require much less than 20% down - your lender is your best resource to understand your options.