The Mortgage Process – Documentation

Providing Documentation

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.

 

Income:

  • 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.

 

Assets:

  • 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.

 

Your Statements:

  • Save all pages of your asset statements, even if some are blank or are just advertisements.

 

Deposits:

  • 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.

 

Liquidation:

  • 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.

 

Current housing:

  • 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.

 

Credit:

  • 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.

 

Employment Stability:

  • 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.
2016-11-08T19:02:06+00:00 Categories: First Time Home Buyer, The Mortgage Process|