A Borrower’s Checklist
What You’ll Need For Your Home Loan Application
It’s exciting to buy a new home. However, there are a lot of steps that go into this process, especially when it comes to your mortgage. Lenders need to know more about you to decide how much money they can lend you and at what interest rate. Being prepared to provide this information will make your homebuying experience much simpler and easier.
1. Sales Contract and Property Information
Once you decide on which home you want to buy, the next step is to make an offer. If the seller accepts your bid, then you’ll complete a signed agreement. This document contains all of the terms and details between you and the seller with regard to this real estate transaction. You will need to bring this signed agreement (also known as a sales contract) to the lender. You may also need to provide contact information for people who can access the property.
2. Personal Information
Your mortgage lender will ask for a list of information regarding you. In particular, be sure you have the following information and documents ready:
- Your home address for the last two years
- The name and address of current landlord/mortgage holder (if applicable)
- Your driver’s license
- Your social security information
- A dollar amount for what you pay now for housing
If you work for someone else, you might be asked to supply:
- Pay stubs signed by a company rep (paper or online versions)
- A minimum two years of employment history and contact information for those employers
- One month’s worth of paystubs
- W2 forms and tax returns for two years prior (especially for commission income and/or unreimbursed expenses)
- If you were unemployed during the last two years (or employed less than two years), a letter that explains this gap
If you work for yourself, you’ll be asked to show:
- That your business earns money
- That your business is well managed (you need to show that revenue has increased and/or costs have gone down)
- Your company Balance Sheet (Profit and Loss statement)
- Personal tax returns for two years
- Corporate tax returns (if applicable)
Alternate income you may be asked to prove:
- Pension income
- Social security income
- Other forms of income not generated through employment, such as awards letters, trust funds, etc.
4. Overall Financial Health
In addition to proving your income, a lender will also want to see details about your financial health. In particular, they will want to know the following:
If you have large deposits in addition to your paycheck, you will need to prove their sources. In general, the lender will ask to see paperwork to prove what assets you have. Your paperwork needs to cover at least two months of time and may include any of the following:
- Bank statements for a healthy account with savings
- Proof of stock options or other savings
- Paperwork for retirement funds
- Evidence of other real estate properties which you fully own, etc.
Liabilities and debts
Lenders want to know how much you owe and how well you pay back loans. Your credit history will show this information. If you have past issues with bad credit, you will need to provide a written explanation about what happened. If you have had any bankruptcies in the past seven years, you’ll need to provide documentation that fully details it, as well as legal proof of discharge of the bankruptcy from your credit history and verification that you have satisfied the waiting period to apply for a mortgage. If you own other land or have other mortgages, you will need to provide tax and insurance documentation for them, as well.
5. Other Information
If you are divorced, receiving (or paying) alimony or child support, or are eligible for VA loans, you will need to supply documentation on this, as well.
Use the checklist above—keep it handy. The best way to ensure you’re ready to buy a home is to be ready for all the questions your lender will ask. Use this checklist to prepare now, so when you find your dream home, you are one step ahead of the game, and nearer to making the dream a reality!
HERE’S A SHORTCUT: If you want to make better use of your time shopping for a home, know how much home you can afford. Get pre-qualified for a home loan before you
start shopping by providing your lender with the items on this checklist.