Shopping for a Home? Here's What You'll Need to Get a Mortgage
Applying for a mortgage can be a long and complicated process, and one of the main reasons for this is the vast amount of paperwork involved. In order to jump-start the process, here's an overview of what you may need to get your mortgage approved quickly.
Documentation you will needThere are certain pieces of documentation all borrowers will need. You can expect your lender to ask for the following:
- A copy of your driver's license.
- A copy of your Social Security card.
- Your last two years of W-2s and/or 1099s.
- Your last two years of federal tax returns, with all attached schedules.
- Your last two months of bank statements, including (but not limited to) checking, savings, brokerage, and retirement accounts.
- Pay stubs from the past 30 days.
Source: 401kcalculator.org via Flickr.
Documentation you might needThere are also several pieces of documentation that don't apply to all borrowers. If any of the things on this list apply to you, be prepared for your lender to request it:
- Corporate tax returns and YTD profit/loss statement (if you own a business).
- Documentation for any large, non-payroll deposits into your bank accounts (usually over $500 is considered large).
- If you're selling your current home, a copy of the sales contract or listing agreement.
- If you're not planning to sell your current home, a monthly mortgage statement.
- If you plan on renting out your current home, a copy of a signed, 12-month lease for the property.
- A copy of your divorce decree or separation agreement (if that applies to you).
- If you've been a renter, the address and telephone numbers of your landlords for the past two years.
- If you have any derogatory credit information (late payments, paid collections, judgements, etc.), be prepared to have a written letter of explanation.
- A letter explaining any recent credit inquiries and whether or not they resulted in any new credit cards or loans.
- A signed gift letter (from whoever is giving you money), if some of your down payment will be coming from a gift.
- Proof of veteran status (if applying for a VA loan).
- Proof of any additional income, such as Social Security benefits or child support.
- Titles for your cars and any other property you own.
It's better to over-prepareThere's a reason it takes so long to close on a home, and why many people experience delays when going through the process. Simply put, when you need to come up with a variety of different documents, things tend to get lost or forgotten about.
Bear in mind that this isn't even an exhaustive list. If there are any special financial or personal situations that apply to you, your lender could (and probably will) ask you for further documentation. However, gathering all of the items on the lists above (that apply to you) will give you an advantage going into the process.
As a final thought, one of the best things you can do when getting ready to apply for a mortgage is to over-prepare. Keep a file with an extra copy of every piece of documentation you collect for your lender, and make sure it's easily accessible if needed. It may take a little extra time to do this, but it's certainly easier than going back to your employer for another copy of your last W-2, or reprinting all of your bank statements.
If you do a good job of preparing for the mortgage process, you can eliminate a lot of the headaches, frustration, and delays that a lot of home buyers deal with.
The article Shopping for a Home? Here's What You'll Need to Get a Mortgage originally appeared on Fool.com.
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