Documents to Gather When Applying for Mortgage
The prospect of a new home, particularly your first home, is always very exciting. Going from renters to homeowners can be an overwhelming process, and you may not know where to even begin proving yourself as a person worthy of a mortgage loan.
So you’ve found the perfect home, and have a good idea of your budget. Now is the time to start getting your financial documents ducks in a row for the bank. What will you need before signing all of that endless paperwork? See these tips below, and you’ll be setting the closing date in no time.
W2 forms, and paystubs if you receive them. Proof of income is one of the most important ways to show a lender that you are financially ready to take this next step, and a long work history shows your commitment to earning enough to paying your long standing debts. Try to gather at least two years of W2 forms, and several months worth of recent paystubs to reflect your most current income.
Tax returns. On top of your recent W2s, you will be required to show a copy of your most recent tax returns, as well as sign a document allowing the transcripts to be requested straight from the IRS. This paperwork will be looked over very carefully in order to be sure there is no evidence of misinformation or fraud. Be sure to include any all paperwork, especially if you own a business.
A list of your current debts. To calculate your financial net worth, it’s important for a lender to figure out your debt to income ratio. This means they will take into account all of your current assets, minus all of your current debts. This can include existing loans, credit cards, student loans, or existing mortgages.
Also a list of your current assets. You will need statements for any checking, savings, or investment accounts you may have, as well as a list of other assets. Properties owned or recent sales you made in order to gather money for your down payment will all want to be seen in order to show you can be responsible enough to pay down your loan, even in hard financial circumstances. Car titles can also be included as an asset.
Your credit report. While this will likely be ordered on your behalf, it’s always good to know where you stand with your credit before applying for something as large as a mortgage. If you are married and applying for a mortgage in both names, the person with the higher income may be the credit score chosen to apply. A good to excellent credit score shows that you are responsible with paying off your debts, and can earn you anything from a lower interest rate to point applied.
Some miscellaneous items you may have to gather. Child support payments (made or received), marriage certificates or divorce decrees, or lease agreements if you are renting out a property can all be requested, so be sure to have these readily available to show your lender.
If you are lacking any of these documents, or just in a transitional phase where they simply can’t be gathered, consider getting a short term loan from a hard money lender. They will require much less documentation, and can help you get from point A to point B without having to dig up your entire financial history.