Like any financial and legal process, buying a home is heavy on the paperwork.
Whether you need to fill out an entire form or just provide initials and signature, it’s important to respond promptly.
Staying on top of your documents will allow the process to move forward in an orderly and timely fashion. Thankfully, many documents will be available digitally, only just awaiting your electronic blessing.
Here are some of the documents you’ll be working with when you begin the process of getting a pre-approval.
When it’s time for the review of your financial particulars, be prepared for the following:
- W-2s and paystubs
- Self employed? – If you work for your own business, an annual profit and loss statement, and two years of records, will be needed for your mortgage application. Form 1099 may also be required.
- Rental income – Details about your investment properties, such as income, address, lease information and current market value is qualifying income that warrants review and documentation.
Along with the above, assets will also be recorded, including bank statements, 401K and retirement accounts and any other investment holdings. As a reminder: Provide the full picture of your documents. Avoid leaving out pages, even if they are blank. If they are part of the statement, be sure to include them.
The debt you carry will also be examined. Lenders use your debt-to-income ratio as criteria for determining your credit worthiness. These include:
- Monthly debt payments you’re making;
- Student loan information;
- Car loan information;
- Credit card summaries; and
- Any other form of credit.
When you submit these documents, be sure to include the account number, balance and minimum payment required.
Other possible records you may be asked to submit include information about how much you pay for rent, divorce decree (if applicable), details about bankruptcy or foreclosure and letters from those who helped provide a down payment funding as a gift.
Getting a pre-approval can help you get a leg up on the competition. It’ll also prepare the lenders with information they’ll inevitably use to verify your income and financial standing as they begin the underwriting process.