So you decided to apply for a mortgage? Now what do you need? Â Sometimes when I talk to clients, they think I need all kinds of information, others want to know why I need things like bank statements.
The basic needs are:
- last two paystubs (cover a 30 day time span ideally)
- last two years of w2’s and federal tax returns
- last two months bank statements
- homeowners insurance contact information
- court decree if there is child support
- bankruptcy docs if they apply
There are times we will need more information – for example if you are applying for a VA loan, we will need your certificate of eligibilty. We may need information on a past foreclosure if you had one in the last 7 years. We may ask about previous addresses that show up on a credit report.
So then I get asked – why do you need all this? We have to document your income and assets. We use the tax return and paystubs to make sure we have accurate income. Some people write off business expenses, if you do that, we have to reduce your income by the amount you write off. We need to show a history of income and make sure it’s stable. Â We need to document the money you are using for closing. If there are large deposits into your bank account, we may need to know where that money came from. Don’t deposit cash – we have no way to verify where the cash came from. Â We need to know that there isn’t a new loan that could affect your ability to repay the new mortgage.
When we look at your credit report, we may need to have any disputed language removed from tradelines – if there is an account that is currently disputed, it usually isn’t figured into the credit score, so we ask you to remove the dispute so the score is accurate. Â If you have collections, they may have to be paid prior to the loan closing. If there are judgments, we need to show that they are satisfied – a judgement could become a lien on your home.
I know it may seem ridculous, but there are reasons behind the madness! Â Most of it comes from previous years where we had many foreclosures and over the years, lenders have learned what they need to watch for. Â There are times I agree that something is crazy, but usually it’s easier just to get whatever the underwriter needs! The basic list is simple to remember – two of everything (paystubs, tax returns and bank statements!). Sometimes you will need more, but it’s a great starting point.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
