Before applying for a mortgage, you should be prepared to supply your lender with a comprehensive set of documentation. It can take a bit of time to gather this paperwork, but its worth the effort when it gets to your lender.
Besides verifying income and employment, lenders also need to see proof of assets. They want to make sure you have enough cash reserves for your down payment and closing costs. This includes bank statements for checking and savings accounts, investment accounts and retirement accounts.
Getting pre-approved for a home loan is a great way to start your housing search. It helps you get a sense of how much you can afford and gives you confidence when it comes time to make an offer on a property. In addition, it shows sellers that you are serious about purchasing a home and may increase your chances of winning an offer.
In the process of getting pre-approved, a mortgage lender will review your income, assets and debt to ensure that you can afford a loan. They will also check your credit report for any inaccuracies that might impact your ability to qualify for the loan.
You will also need to provide a variety of documents, including your most recent two years’ worth of W-2s. These can be gathered from your employer or printed out online.
Lenders will also need to see your recent bank statements, so it’s important to collect them from the last three months. Your lender will use these statements to verify your income and employment history.
Your credit score is one of the most important pieces of information lenders use when deciding whether or not to approve you for a mortgage. It is a factor in the interest rate you’ll receive, so it’s best to maintain a high score.
You can improve your credit score by paying down debt and resolving inaccuracies on your report. It’s also a good idea to contact multiple lenders before deciding on a specific lender for your pre-approval.
The mortgage application process can be overwhelming, but a little preparation can help streamline it. The following checklist can help you keep track of what documentation you need to submit to your lender as you prepare to get pre-approved for a mortgage.
When you have this checklist ready, the mortgage application process can be easier and quicker. Keeping track of your paperwork can also prevent delays in the mortgage approval process.
Once you’re pre-approved, the lender will give you a letter that outlines the mortgage amount you were approved for. This letter will be your final proof of how much you can afford to spend on a home and will show sellers that you are serious about buying.
Review Your Credit Report
Your credit report is an important document that tells lenders how responsible you are to repay debt. It also provides information about whether youve been the victim of identity theft. Its best to check it at least once a year so that you can catch any errors or red flags early on.
A credit report contains your personal identifying information, as well as your financial accounts and records from the last seven years (open or closed). Its free to get one copy of your credit report every year from each of the three major credit bureaus: Equifax, Experian, and TransUnion.
The report should be about eight pages long, and it includes the following sections: a summary of your open credit accounts; an account history that shows the dates you opened each account, the amount you owe, the balance, and how much you paid; and a listing of recent inquiries.
Inquiries are when companies or individuals ask to see your credit reports because youre looking for a loan, mortgage or other type of credit. These inquiries should stay on your credit report for about two years, and they can negatively impact your credit scores.
There are two types of credit inquiries: soft and hard. Soft inquiries occur when companies want to send you promotional materials or check your financial status, while hard inquiries are when you actually apply for a credit card or other type of credit.
When reviewing your credit report, look for red flags such as inquiries from unfamiliar businesses or a large number of inquiries within a short period. This indicates that a lender or creditor may be trying to scam you.
If you do notice any mistakes, contact the company that reported the information or file a dispute. Your credit bureau is required by law to explain any information that you do not understand, and you can use a dispute form to bring any errors to their attention.
Then, you can fix any errors or improve your score. Its a good idea to check your credit report regularly so that you can catch any errors that may prevent you from getting the home of your dreams.
Review Your Employment History
Your employment history is one of the most important parts of your mortgage application. It’s used to determine whether you can afford to make the payments on your mortgage. It also shows a lender how long you’ve worked and what types of jobs you’ve held.
It can be difficult to remember everything that’s gone on in your career, especially if you’ve been out of the workforce for an extended period of time. That’s why it’s important to have a record of your job history handy at all times.
A good employment history will be detailed and include all your previous employers, the positions that you’ve held, the dates of each position, and your salary. This information can be very helpful to a potential employer and may even help them decide whether or not you’re a good fit for the position that you’re applying for.
You can easily create a record of your employment history by contacting your past employers or by obtaining copies of your tax records and W2s. Many people who use online services to file their taxes keep these documents, and you can easily get a copy of them in this way.
Alternatively, you can obtain your employment history through your state unemployment office or by filling out a Social Security Administration form to request your earnings records from the past. Regardless of which route you choose, you’ll need to provide proof that you have a complete and accurate employment history before you can be approved for a mortgage.
If you have gaps in your employment history, it’s not necessarily a big deal to a mortgage lender, as long as they can see that you haven’t been unemployed for a prolonged period of time. It’s also acceptable to take time off of work to go back to school or care for a loved one, as long as you can prove that you were not working during this time.
Generally speaking, a two-year employment history is enough to qualify for most mortgages, but there are exceptions to this rule. You’ll need at least two years of employment if you’re a salaried employee or if you earn a regular salary from your job.
Gather Your Documents
When it comes to applying for a mortgage, lenders will need a lot of information about you. This will include income, assets, employment, credit history and more.
It can be daunting to figure out what documentation you need to provide, but having a mortgage application checklist will help streamline the process. By taking the time to gather these documents before you apply, you can speed up your application and ensure that you don’t miss any important details.
Start by collecting your current W-2 forms and tax returns. These will show the lender that you’re earning enough to afford a mortgage, and will help you qualify for a loan.
Next, collect all of your bank statements. These should include the last two months of checking and savings account statements as well as any IRAs, stocks or 401k accounts. The lender will also want to see your recent mortgage statements for any properties you own, including condos and single family homes.
Once you have these documents, make sure that you have them organized in a file that is easy to access. Your lender will need to review these files multiple times during the mortgage application process, so it’s important that you keep them updated.
The lender will also need to see copies of your home insurance policy. If you own a condo, they may ask for the name and contact information of your management company and insurance agent.
You may also be asked to provide proof that you have a history of paying your rent on time. This can include canceled rent checks or evidence of rental agreements with your landlord.
Your credit report will give your lender a more in-depth look at your finances and help them determine how much they’ll be willing to lend you. It will also show any red flags, such as late payments, collections or judgments.
If you’re a first-time homebuyer, the process can be confusing and intimidating. But it can also be a great experience.
To help you get started, Freedom Mortgage has put together a mortgage application checklist that covers everything you need to know before submitting your mortgage paperwork.