Shopping for a home is an exciting process. While you’ve likely created a personal budget to determine how much home you can afford, serious home buying begins in a lender’s office as opposed to an open house. Speak with any experienced real estate agent and they will recommend that you consult with a lender about home mortgages and obtain loan pre-approval before shopping for a home. This gives you the best idea of your price range and also provides better bargaining power when making offers. As you apply for home mortgages, here are the items that you’ll need to have on hand to present for a pre-approval.
Tax Returns and W-2’s
You’ll need to submit your last two years’ tax returns with your mortgage pre-approval application. All tax return schedules should be included here. In addition to this, your last two W-2 statements need to be copied and submitted. To prevent fraud, it has now become an industry standard that lenders will request your tax transcripts directly from the IRS and compare them to the copies that you submit.
Recent Employment Pay Stubs
Typically, the most recent month of verified income needs to be included in your pre-approval package. This can be a copy of a paycheck stub or online printout. If you are self-employed, you may be asked to submit an annual profit and loss statement for your business.
Mortgage lenders will also want to see copies of your last two months’ banks statements. If you receive these in the mail, you can make copies of them, or you can print them out from your online banking account. A lender may also ask to see proof of investment and retirement accounts to show that you have additional assets and savings.
List of Assets and Debts
Speaking of assets, some of your owned assets or debts may not appear on the documentation already provided. A mortgage lender will want a thorough list of each of your assets to show that you have resources to pay unexpected expenses. They’ll also want to know what all of your monthly expenses are, including any auto loans, child support, and student loans. This information will be used to determine your debt-to-income ratio, which will help them make a decision on your loan.
While you don’t actually provide your credit report to the bank, this is a key element in securing a mortgage and not something that you want to leave to chance. Mortgage lenders will check your credit report and credit score, and use this information to make their decision. If you’re planning on applying for a mortgage loan in the near future, it’s a good idea to request your own credit report and work to correct any errors well ahead of time.
There are many other items that a mortgage lender might request from a home buyer as they work to make their lending decision. Obviously, they’ll need proof of valid ID from anyone who will be on the loan. If gift money is used for a down payment, a valid gift letter or other documentation will be required as well.
Starting the pre-approval process may sound like a daunting task, but it’s more a matter of being organized and thorough than anything else. The quicker you deliver requested documents, the faster you’ll be attending those open houses and searching for the home of your dreams. Contact Northpointe Bank with any questions about home mortgages or to begin the pre-approval process now.