As the events of the last few years in the real estate industry show, people forget about the tremendous financial responsibility of purchasing a home at their peril. Here are a few tips for dealing
Thinking Of Applying For A Mortgage
Here are some of the things that you should be prepared to produce during this process:
• Full tax returns from the past two years. You will have to provide all pages from both your state and federal returns. The two years of returns verify that your household income is consistent. If you need to request a copy of your past returns, just fill out Form 4506 from the IRS.
• Two most recent pay stubs from your employer. These stubs must be current or the lender will not accept them. The lender wants to approve you base on your current salary. If you do not have your pay stubs, request them from your company’s human-resources department
• Photo ID – Everyone who is on the loan application will have to produce a photo ID.
• Financial statements from the past two months. You can print these statements off if you have access to online backing, if not, you can request them from your bank. Some lenders will also ask for copies of all of your retirement and investment accounts. They want to see all of your financial resources.
• Signed sales contract. You will only have to provide the signed sales contract when you make an accepted offer on a house, not if you are applying for preapproval.
• Written verification of your position and salary. This will need to be dated and written on company letterhead. The lender might also call your employer during the underwriting process to be sure you have not lost your job since you put in your mortgage application.
• Canceled rent or utility checks. The lender might request that you produce copies of canceled rent or utility checks to prove you have a history of on-time payments.
• Gift letters. If someone is giving you a financial contribution to help cover a down payment or closing costs, you will need to provide a “gift letter” from the donor stating the amount, confirming that the funds are a gift and that you do not have to pay back the amount.
• 1099 forms. If you are self-employed you will have to provide copies of your 1099 forms to the lender. These forms show how much money you were paid as an independent contractor from your clients during a year. The lender will combine your past two years tax turns with these forms to prove that your income is steady.
If you have not applied for a mortgage since 2008, these documentation requirements might come as a shock. The best way to be prepared is to have all of your documentation gathered before you start your application process.
Sam Lepore is a Realtor with Keller Williams in Moorestown, NJ. Call him today at 856.297.6827 ....