When you are ready to purchase your first home, there are a few things you need to have in place. Funding is the big one. You will likely start with a loan application so that you can begin the pre-approval process.
Your application will ask you for basic information regarding your employment, employment history, and financial assets. Although this is great information, you will be asked to submit more specifics and it is important to gather all of the necessary documentation ahead of time.
Documentation To Submit For Pre-Approval
Once you have submitted your application and a credit report is on file with your loan servicer, then you will need to submit the following documentation. These documents will be reviewed by an underwriter that determines your approval or rejection of the loan.
Borrower Identification
To prove your identification, you will need to submit a state-issued driver’s license or ID card. You can also use a passport. This identification will be needed for all borrowers and co-borrowers.
Tax Returns
You will have to submit at least 2 years of tax returns and W-2 forms. Anyone self-employed will need to show a profit and loss statement for the last two years as well as your business license.
Pay Stubs
You will be asked to submit your most recent pay stubs or business profit and loss statement.
Bank Statements
You will be asked to show the last two months of bank statements that will include all of the pages for all of your accounts. This includes checking, savings, and retirement accounts.
Other Documents
Depending on the loan type and your situation you might be asked to submit additional documentation. Sometimes you can be asked to submit the following:
- Mortgage gift letter
- Bankruptcy discharge paperwork
- Divorce decree
- Pension statement
- Social Security/Disability Statement
- Home Owners Association (HOA) Statement
- If you own other properties, you may be asked for current mortgage statements and a homeowner’s insurance declaration for each property
Pre-Approval Letter
After all of these documents are together, they will go through a review process. This is where the underwriter will approve or not approve your home loan. If you are approved your lender can issue your pre-approval letter for the amount you are qualified for and you can begin working with your agent on your home search.
Your pre-approval letter is typically good for 90 days and this letter makes you look like a more viable home buying candidate for sellers. In a hot market, this helps your agent right offers that will help you stand out amongst other buyers that may desire the same home you do. Many agents prefer to work with buyers that already have a pre-approval letter on hand. In short, it means you are a serious buyer.
In Conclusion
Whether you need assistance with the lending process or are ready to begin your home search, speaking to a lender first can ensure you’re off to the right start.
