You’re ready! Or maybe you’re a first-time buyer curious about what you’ll need to get ready! Either way, it is good to be aware of the types of documents you will need to have your loan approved. The good news is that technology has sped up the ways we can communicate. The bad news is that regulations have increased the number of documents required to get a home loan. Also, when it comes to “signing paperwork,” most lenders still want original rather than electronic signatures.
Getting Started on Your Home Loan
Our standard practice is to ask for the following documents from you (and co-borrower, if applicable) to get the loan process started:
- Name and number of your insurance agent who will provide your homeowner’s insurance policy.
- Name of your closing attorney who will do a title search and will oversee the signing of the loan documents.
- Copy of pay stubs from the last 30 days.
- Copy of most recent W-2.
- Copy of all pages of last bank account statement.
- Copy of all pages of last retirement account statement.
- Copy of drivers’ licenses.
- Explanation of any recent activity on your credit report.
- Copy of signed purchase agreement on the home you are buying.
- Copy of tax returns from the past two years if you are self employed.
If you have not obtained a home loan in some time, prepare for us to ask for a lot of paperwork. All lenders are requiring more information from all borrowers. The mortgage industry is now highly regulated. These new laws and regulations are designed to protect you, the borrower, but will keep you busy when applying for a home loan. We are an independent broker and work for you, not the bank. It is the lender who decides what specific additional documents are needed. The lender calls these “conditions” that are needed to get full approval for the loan.
A List of Helpful Tips
- Unchanged Copies. No lender will accept a document that appears to have been altered. Do not mark through confidential information with black marker. Do not white out any notes you may have written in the margin.
- All Pages. If the request is for all pages, all pages includes even the ones that say, “This Page Intentionally Left Blank.”
- Time Limit. If 60 days pass before the loan has been signed, or “closes” in mortgage lingo, you will be asked to supply more current documents.
Ready? you can stop reading and go to our Online Loan Application.
Processing and Underwriting the Loan
These may be phrases you’ve heard before. That’s because two professionals, an processor and an underwriter, work together to get your loan approved. The processor works as an assistant to the loan officer to gather all your documents, verify the homeowner’s insurance, have a title search conducted, get an appraisal, and do all the necessary steps to close the home mortgage.
The lender employs the underwriter to make sure the you meet all standards for approval of the home loan and that the loan meets all regulations required by the federal government and other agencies or banks that may buy your loan once approved.
Following are other documents you may be asked to provide to get your home loan approved.
Profit and Loss Statement
If you own your own business or are an independent contractor, you may have to submit a current profit and loss statement. The statement does not have to be audited by an accountant. This request is most often true if the year is more than half over or you haven’t filed the prior year’s tax return.
Rental Property Income
If you need to use rent from an investment property as a source of income to qualify for the home loan, you need to show the income on your tax return. If you recently purchased the property, you may be allowed to use cancelled rent checks or bank statements showing rent deposits. This would be important to mention early on when you are gathering documents for your loan officer.
If you are planning to buy a new home and rent your current home, you must provide a rental agreement. You also must have at least 30 percent equity in your current residence and may have to pay for an appraisal to confirm the value of your home.
Gift Letter
You are allowed to receive a cash gift to use for your down payment. Many borrowers choose to do so. However, you will have to provide a letter from the person giving you the money, or your “benefactor,” stating the gift is not a loan. Your benefactor must also supply a clear “paper trail,” meaning documents such as bank statements or a copy of a cancelled check or money wire to prove he or she made the gift from legal funds.
Other Documents or Letters
Almost any concern a lender has can require a letter of explanation from you. This is because we are heavily regulated by laws and rules. Banks and lenders must ease the concerns of mortgage buyers in terms of your ability to repay the loan. Banks want to be sure they can “sell” your loan to keep cash on hand. You may be asked for a letter of explanation about the following:
- To explain credit report issues
- To explain why you are moving
- From your employer to confirm your annual bonus
- From your landlord
Lenders may also ask you to provide
- Copy of a divorce decree
- Proof of a child’s age if child support is counted as income
- Bankruptcy discharge papers
Why Work With Us?
Carolina Home Mortgage is local and an independent small business. You’ll find our rates are low if you do the comparison. For 15 years we have helped clients become our neighbors. You don’t get to do that unless you offer quality and client-centered service.
Email your questions to
nfo@carolinahomemortgage.com
or call us. At the end of the day, we report to you, not the bank! We are available after hours and weekends, too.
