Whether you’re getting pre-approved or a final approval, you’ll need to document your assets by providing bank and investment statements, pay stubs, a credit report, and tax information such as a W-2 or tax return. If you’re self-employed or a small-business owner, you might need to provide more documentation about your income over several years, to give your lender a better understanding of your finances. One important statistic that will follow you throughout your loan process is your debt-to-income ratio. It’s preferable for it to be below 40 percent, with the ceiling set at around 50 percent.
- Provide your last two paystubs along with your W2s and Federal tax returns for the last two years (include all schedules). State returns are not needed.
- If you are self-employed, ask me for the additional documentation requirements.
- If you receive bonus or commissions or have changed your job or position, let’s talk.
- Combine all the funds needed to close into one account at least two months prior to your application.
- Document any other deposits here as each could be scrutinized.
- Save all pages of your asset statements, even if some are blank or are just advertisements.
- Make copies of checks and deposit slips to prove they are not borrowed money.
- Deposit checks individually.
- Don’t deposit cash without clear proof of the source.
- If you are going to sell stocks, bonds, investments or borrow against a retirement account, do it now. Cashing out now may cost you a few dollars in additional gains, but it also protects against losses.
- If you own and are selling, provide a copy of the HUD-1 settlement statement.
- If you own and are not selling, you’ll need to qualify for both homes or meet the requirements for renting the current.
- If you are renting, show 12 months of canceled checks demonstrating timely payments and/or written verification from your management company. Ideally, pay your rent on the same day each month on or prior to its due date.
- If you live with family, you may need a letter stating that you live rent-free.
- Your mortgage advisor will get your credit report for you and go over it with you
- Identify any errors now and consult with us for the correct action to take.
- If you co-signed a loan or are being reimbursed for a loan that’s in your name, you’ll need at least six months of checks to exclude it.
- Avoid new credit or inquiries. These can lower your score and increase your rate.
- Ideally, you’ll have two years or more with your current employer.
- Consult with us before changing employers, position or method of compensation. For example, don’t switch from salary to commissions.