Buying A Home? Prepare Your Paperwork
Shopping for your first home is exciting. But, it can also be overwhelming. What you won’t see on most of those home-buying television shows is the preparation that goes into applying and qualifying for a mortgage, often before the shopping process even begins.
A little proactive effort before falling in love with a home can go a long way toward a smooth process. And, it can even provide you with a competitive advantage over less-prepared buyers when the time comes to make an offer.
Check Your Credit Report
One of the best ways to start your search for a home is to check your credit reports. The three major credit bureaus – Experian, Equifax and TransUnion – each offer a free annual credit report to consumers. Finding and addressing problems in advance may lower your interest rate and help you avoid a surprise that costs you your dream home.
The simplest information to gather will be your personal information. You, and anyone applying for a mortgage with you, will be asked for their social security number, a current photo ID, and all residence addresses during the past two years.
In addition to proving who you are, you will be asked to show that your income is accurate and stable. Make a list of the names and addresses of any employers for the past two years and copies of the W-2 or 1099 forms for all applicants during the same time period. Your most recent pay-stubs or an employment verification letter will also be helpful. Self-employed applicants will likely need to provide business financial records and tax returns.
The most tedious part of the process is likely to be providing a comprehensive overview of your financial situation. You will need a full list of any checking and saving accounts, including statements for the two months prior to applying. You’ll also be asked for statements from any investment or retirement accounts and personal tax returns for the past two years.
First-time homebuyers may need to provide proof of on-time rent payments for the previous year. Applicants with alimony or child support obligations should be able to submit their divorce documents or maintenance agreements. You will also need to account for any income that you’ve received in the last two years, so if a family member is giving you money for a down payment, ask them for a gift letter that verifies it won’t need to be paid back. If you have income from sources other than your job, be prepared to explain where the money came from.
If you’ve already done the prep work, or still need a little guidance along the way, Open Mortgage’s friendly loan originators are standing by to help you. Contact us today.