Got your eye on a new home? Better start gathering your papers…
You may be excited about the prospect of moving to make a fresh start, or even perhaps becoming a homeowner for the first time, but it’s also understandable if you’re anxious. The mortgage loan process is, after all, infamously complex.
You aren’t alone. But mortgage applications only seem daunting because of the required paperwork involved; if you know in advance what you’ll need, the process becomes much, much easier. We’ll tell you what you need below.
Why Apply?
Before you find the home of your dreams, you should get the bank’s blessing in advance. The mortgage loan application is standard procedure and will tell you how much you’re approved for. Essentially, it is what the bank is willing to lend you to finance the new home, based on many factors that range from your credit worthiness to your annual salary. Once you know how much you’re approved for, you can shop for homes in that range.
Application Process Documents Needed
Now that it’s time to start the application process, what do you need to have at the ready?
Pre-approval Documents (for Purchase):
For pre-approval, make sure you have:
- W-2 for the last 2 years
- Federal Tax Returns for the last 2 years
- Paystubs for the last 30 days
- Driver’s License or Passport copy
- Last 2 consecutive bank statements (all pages): This includes checking and savings accounts, 401(k)s, investments, etc.
- Executed purchase contract
- Realtor contact information
- Escrow contact information (if applicable)
Additional Documents
Depending on the mortgage lender or your unique situation, additional items may be needed to complete your application. The necessity of providing these documents will depend on many factors, such as whether you’re divorced, accepting or making child support payments, or large recent bank deposits.
Additional items may include:
- K1s and Business Tax returns for self-employed borrowers
- Divorce decree
- Copy of Trust
- Copy of alimony or child support award letters
- Letters of Explanation for credit inquiries made in the past 90 days
- Any bank deposits greater than 50% of your qualifying income
A Word About FICO…
While your lender will do its own research into your financial status, it’s a good idea to know your FICO score and keep a copy with you. This score is particularly important when you’re applying for a home loan, because how good or bad your FICO score is will determine how much you’re going to pay for your mortgage as part of the up-front fees as well as total interest payments.
A lot of factors go into your FICO score, such as:
- Payment history
- Debt burden
- Length of credit history
- Type of credit
- Recent searches for credit
To find your FICO score, there are a number of available tools out there on the internet – just Google one and you’ll find what you’re looking for in a flash. You can also talk to a mortgage lender and they will be happy to help you out.
Contact Capstone Direct
Ready to finance your home? Call Capstone Direct today at 800-700-8800. We’ll get you the best rates AND the fastest loan!