Coldwell Banker Relocation Team

If you think you want to buy a home, one of the first steps to take is to talk to a mortgage loan officer. You can talk to one at a bank or credit union where you have an account. Or contact me and I'll give you the names of the loan officers that I consider to be the best in town. And when getting a loan these days, you want a good loan officer. To get a mortgage, you need income history, a good credit rating, cash for a down payment and closing costs, and an income to debt ratio that indicates you can afford to have a mortgage and make payments.

Lenders require paperwork that documents every facet of your financial life: taxable income, assets, rent payments and more. Here's a list of items you may need to document income.

All Borrowers:
- Uniform Residential Loan Application (form 1003). This form is completed by the applicant and the lender. It is used to provide information on the type of mortgage, property, borrower, borrower's employment, borrower's income and expenses, borrower's assets and liabilities.
- Last 1 year of your W-2's, 1099's (2 years if 100% financing USDA)
- Last pay stub, indicating year to date earnings (30 consecutive days)
- Last 2 months complete official bank and investment statements.
- Homeowner's insurance agent name and number
- Current mortgage statement(s)

Self Employed:
- Last year's complete business and personal Tax Returns (including all schedules)
- Year-to-date Profit and Loss statement, prepared by CPA and signed by applicant

Home Purchase Information
- Copy of signed Purchase and Sale agreement

Additional Items that May Be Neded:
- If divorced in past 2 years, copy of divorce decree
- Copy of current rental/lease agreements on all rental property owned
- Copy of Social Security card(s)
- Military: Certificate of Eligibility and DD214

The following information provides details for some of the items listed above.

Bank, investment and tax documents
Borrowers generally must supply bank and investment account statements for the last 30 days.

Borrowers also must sign IRS Form 4506-T, which allows the lender to get a transcript of the tax return from the IRS. This practice "has become an industry standard as fraud prevention," says Brad Blackwell, national sales manager at Wells Fargo Home Mortgage. Don't try to amend a prior year's tax returns to show more income. That's now a no-no.

Profit-and-loss statement
Self-employed borrowers may have to submit a current-year profit-and-loss statement, especially if the year is more than half over or they haven't filed their prior year's tax return.

Gift letter, paper trail
Borrowers who receive a cash gift toward their down payment should be prepared to provide a letter from the "giftor" that declares the gift isn't a loan. A copy of the giftor's bank account statement showing the funds, a canceled check and the borrower's own statement showing the funds also may be required.

Other documents, letters
Renters must supply 12 months of canceled rent checks and bank statements showing the rent was paid on time. Renters without that documentation can provide the landlord's name and contact information for payment verification.

Loan documentation tips

Bring in documents early. Doing so can speed up the process. (loan officers tell me that getting docs from buyers slows the process more than any other step). Also, never cross out, white-out or alter any information on a document.
Always provide every page of every document -- even the pages that say "This page is blank."
Remain ready to supply updated documents.
Documents expire after 60 days, So if homebuyers take a long time in their house-hunting effort, they will have to bring the most current paycheck and that type of thing.

Share: del.icio.us Digg StumbleUpon

Post a Comment on "Obtaining Financing to Buy a Home"

Return to Website Home

Contributors

Useful Information About Bellingham Real Estate
by Tom DeRose