OK, you have decided you are finally ready
to take the plunge and have decided to purchase a home. If you have found the perfect home or if you
are just starting the process, you will need to be prepared to apply for a
mortgage loan. These days, the documentation
required to apply for a loan can be daunting and it seems like everything
but the kitchen sink is needed. With
the new qualified-mortgage rules that took effect this past January, there are
a few things you will need to supply the bank for them to pre-approve your
loan. First and foremost, anyone who will
be on the loan must present valid photo identification. Also, the mortgage company will need to have
copies of your state and federal tax returns for the last two years in order to
verify your household income. You will
also need to provide at least two of your recent pay stubs, in order to show
proof of your salary, and the lender will call your HR department to verify current employment. In fact, the lender will call your employer again, the day before escrow closes.
If you are self-employed, copies of your 1099
forms will need to be provided. Either
case, the bank may additionally require financial statements from bank
accounts, investment accounts, retirement accounts, etc. for the last two
months, so be prepared if they ask for them.
First time homebuyers might be asked to provide copies of cancelled
checks for rent or utilities, in order to prove that you pay your bills on
time. If someone is helping you purchase
the home by providing a money gift to you, for say the down payment or closing costs,
you will need to supply a “gift letter” from them saying the money does not
need to be paid back. After you have found
the home, the mortgage company will need a to receive proof of home insurance
prior to the loan approval. Being prepared
will make the whole process easier, so, gather up the necessary documents and take
a deep breath. It could be worse, at
least they didn’t ask for your first-born child.
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