For many, the mention of buying a home conjures up mountains of paperwork, headaches, and delays. To shorten or perhaps avoid some delays in the long process of home purchasing, here are some documents you should have prepared and ready when you are applying for a home loan. W-2’s as far as three years back
- Tax returns as far as three years back
- Year-to-date paystub
- Verification of employment
- Copy of driver’s license or other government issue ID
- A check for the application fee
- Letter explaining bankruptcy or foreclosure (if applicable)
- Complete copy of bankruptcy (if applicable)
- Bank statements for all accounts as far as 3 months back
- Letters of explanation of any non auto-deposits in the accounts
If you have to go to a third party to obtain some documents, like a lawyer for bankruptcy papers, make a copy for yourself before giving to the lender as their policy does not allow them to return anything that gets put into their file. The lender will also run a credit check to determine your level of risk as a borrower and also to assess the interest of your loan.
Working with the Lender
Once you begin contact with a lender and gain preapproval, the next step is to find the right home and draw up a purchase agreement with your real estate agent. Once the lender has a copy of the purchase agreement, they will send you certain documents and releases to be signed, so you will not have these ahead of time, but here’s an idea of what else they will need signed and dated from you.
- Purchase agreement between you (buyer) and the seller
- Borrower’s Authorization– a release that allows them to obtain relevant information about you.
- Energy Efficiency fact sheet
- HUD application (if applying for FHA loan)
- FHA Amendatory Clause (if FHA loan)
- IRS document allowing them to pull tax files
- Letter to explain recent credit inquiries
- Satisfactory appraisal
- Home insurance binder
- Any credit documents must be less than 120 days old
When the lender has compiled all these needed documents, the completed file will most likely be sent to an underwriter quite a distance from you. It will then take some time for the file to be reviewed, and after that there is the chance more information may still be needed before the final approval can come through. Stay hopeful, stay patient, if all of your finances are in order and you have good credit history, your chances are good. Of course, please be expecting unforeseen bumps in the road along the way. Most real estate agents are quick to quell their buyer’s worries with the notion that nothing is ever quick or easy in real estate.