When applying for a home loan, giving the required information can feel overwhelming. Depending on your situation, it could take weeks to track down all the required documents and if you can’t get them in a timely fashion, you’ll only slow down the approval process. As such, it is important to be prepared by knowing what information is required. Here are the basic documents you must have ready when you start your home loan application.
In order to ascertain that you will be able to make your monthly payments, your lender needs to verify that you have an adequate and steady flow of income. This consists of looking at your employment and earning history as well as considering any other funds that you receive on a regular basis.
Here are some of the documents that lenders look in order to verify your income:
-Recent W-2s and recent pay stubs
-Last two years of tax returns
-Profit & loss statements and 1099 forms
-Divorce decree and any other legal document that verifies that child support and alimony payments will continue for at least three years after mortgage application.
Your credit history is a primary factor when it comes to determining your eligibility for a home loan. For this information, you will need to give the lender written or verbal permission to pull your credit report. They will look at your credit history and decide your creditworthiness. With things like foreclosure or bankruptcy, you may have to wait for several years before you’re considered eligible for a mortgage.
If there are any extenuating events that resulted to bad marks on your credit score, there are several things you can provide in order to prove that that event was out of your control. This can be:
-A letter of explanation that shows what happened and why you could not resolve the issue without taking a toll on your credit score.
-Documents that confirm that event, like layoff notice or medical bills.
Assets and Liabilities
Lending institutions want to be certain that you can make your monthly payments even if you experience financial hurdles. To achieve this, they look at your assets to determine whether you have the money to cover the payments. This money can be in varying forms including investment portfolios, bank accounts, money gifted to you and even retirement savings.
You’ll need to give thorough information regarding any funds you intend to use if you want to qualify. These documents include:
-Recent statements from checking or savings accounts going back at least 2 months.
-Recent retirement account statements
-Documents relating to the sale of any assets
This is not the only information you’ll be required to give, but the documents mentioned are the most important.
Check with your local Mortgage Broker with what you need in your specific location.