So you are in the preliminary stages of getting ready to shop for a home loan, either to purchase or refinance. A suggestion from a lender we talked to the other day was to create a “New Home” folder, or whatever you are securing the loan for.
The idea is to gather all the necessary paperwork needed by the lender and keep it updated all the time so when you are asked for something, you know exactly where it’s at. Based on the required items, you might have to consider a box as it may not all fit in one folder.
What lenders want are documents that prove your income and assets, and the sources of both. So the first and most important documents are as follows:
- 2 months of bank statements from all banks & asset accounts (retirement and investments). Obviously this is something you’ll need to update each month.
- 2 months of income statements. Paychecks & dividend income, (again updated as needed).
- 2 years of filed & signed tax statements with all associated schedules. If you file electronically, print and sign copies for the bank. The signature is important as that certifies you saying it’s correct.
- 2 years of employment history with employer contact information. They WILL call to verify.
Some additional items may apply and it helps to have this ready to go as well:
- Documentation on the source of any extra money, especially if it’s part of your down payment. For example a gift from a relative; provide a copy of their canceled check and your deposit slip to show how and when it was put in your bank account. Same if it was an inheritance, a copy of the will showing the amount and when you deposited it, and a death certificate.
- If you’ve been through a divorce you’ll need the divorce settlement and documentation on child support. This only applies in certain situations and can depend on the children’s ages but it’s better to be prepared in case it comes up.
- Paperwork for any judgments or liens against you and explanations in writing on payment plans or history if paid off. These will show up in a credit report so it’s best to be prepared ahead of time.
- If you’ve been renting, copies of the lease / rental agreement and 2 years of canceled checks.
- If applying for a VA loan; Certificate of Eligibility, DD 214, and Disability paperwork if applicable.
Consider this a basic list; in each situation the type of loan and your credit rating can dictate the need for even greater documentation. Don’t’ forget you’ll also need to prove you are you. Typically that means having a VALID drivers license (pull yours out right now and make sure it’s not expired), a social security card, or a permanent resident alien card.
It’s also a good idea to check your credit reports now so there are no surprises. If you haven’t done so in the past year, you can request free credit reports from the 3 main credit companies. If you find mistakes you have time to work on getting them corrected before you start the actual loan process.
Finally don’t do anything that might hurt your credit while the loan processing is taking place. Check our post on Your Credit and Buying a Home for details.
Now look at this list and determine how big of a box do you need?
If you need any help with finding a lender, give us a call and we can give you names of some of our recommended lenders. And if you are preparing to purchase a home, we can help you with that too!