Some of the most challenging things about buying a home is the mortgage process. A lender can run a credit report and grant a quick basic pre-qualification letter in a matter of hours, but full-on loan approval will be contingent on your gathering a lot of paperwork. The more complex your assets, the more docs you’ll need. The days of “no-doc” and “stated income” loans disappeared with during the Great Recession and they haven’t come back. Many find the volume of needed paperwork to be excessive and frustrating, but the tightening of guidelines has lead to a more stable economy for us all.
With a little forethought, you can make the process a little easier. Our recommendation is to place everything into a central location such as a Dropbox folder or into a Google Drive folder. You can then share the link with your loan originator or underwriter.
Here are the docs you will likely need:
INCOME VERIFICATION
☐ Pay stubs: Most recent, covering the last 30 day period
☐ W-2’s and/or 1099’s: Most recent 2 year period
☐ Tax Returns: Most recent 2 year period (include personal and business if applicable)
ASSET VERIFICATION
☐ All bank statements: Most recent 2 months (all pages)
☐ Retirement/Investment: Most Recent 2 months or most recent quarterly (all pages)
CREDIT REPORT
☐ During the process, your lender will run your credit and send the credit report to you. (there may be a charge for this)
OTHER ITEMS
☐ Photo ID
☐ Property Owners: For each property owned, provide your most recent mortgage statement, and homeowner’s insurance declaration page
☐ Renters: You’ll need a copy of your current rental agreement
☐ Business owners: Provide K-1’s if less than 25% ownership or full tax returns if more than 25%
☐ Recent Graduates: A copy of your diploma
☐ Job Transferees: A copy of your employment offer letter
☐ Home Sale Contingencies: A copy of your executed purchase contract
☐ Veterans: VA eligibility voucher
PRE-APPROVED V. PRE-QUALIFIED
We highly recommend that you go ahead and pursue full loan pre-approval even before you find the home of your dreams. Here are a few reasons why:
- If you find yourself in a competitive bidding situation, it will be helpful to have an Approval letter that is stronger than other buyer’s Qualification letters.
- Mortgage underwriting is complicated. Even if you have a stellar credit score, your loan may be denied if you don’t earn your income in traditionally verifiable ways. It’s better to know this in advance. (before you’ve spent money on inspections and appraisal)
- In certain instances, the amount of time needed to close a loan can be reduced by days or even weeks if you have all your ducks in a row up front.Bottom Line: No one wants to spin their wheels needlessly. Gaining loan approval as quickly as possible is in all party’s interest. It’s the smart thing to do.
P.S. – We always recommend using a local mortgage provider as opposed to an online lender or big box bank, because being able to get your actual loan officer on the phone (instead of an anonymous 1-800 operator) can be invaluable during the contract-to-close period.
