So let’s go down the list of items you’ll need to round up and why they are required. An important thing to understand is that as a loan officer we don’t personally make this list or the underwriting requirements and neither does our company. The items needed are generally driven by the investor and as put forth by the Government Sponsored Enterprises known as Fannie Mae, Freddie Mac and others. So here’s what we need…
First is proof of income including the most recent months’ worth of pay stubs along with the last two years of W2’s and taxes – both personal and business returns. Most folks think that mortgage loans are based on the property since it becomes collateral or security for the loan. Although that’s certainly part of the equation, loans are really made based on one’s ability to pay it back! Understand that investors are in the “interest collection business” so one’s ability to show income and therefore the means to pay back the loan, is most important for the loan approval.
If you’re self-employed and don’t have paychecks, that’s OK too as long as you’ve been at your profession for a couple of years. In that case, we’ll use the last two years of taxes including personal and business to show your income.
Next up are assets including two most recent monthly bank or credit union statements along with one most recent retirement or brokerage account statement as these are usually distributed quarterly instead of monthly. Assets are need for down payment purposes but also for reserve requirements. Showing the investor some additional assets such as retirement funds can strengthen a file as needed. This doesn’t mean we are necessarily going to use those monies for your transaction so much as it shows the borrower has additional resources to cover their liabilities.
Finally be prepared to provide who you’d like to use for homeowners insurance including your agents name, phone number and company name. You won’t be able to own your first or next home without having insurance in place which is an important part of the process.
And lastly we’ll need a copy of your driver’s license or other government issued ID.
Now this list isn’t all inclusive, if you’ve also had a divorce, bankruptcy, judgment, tax lien or previous foreclosure – you may be asked for additional information like the divorce decree, bankruptcy papers or IRS tax payment plan.
Wrapping this up, it’s important to work with your loan officer to gather the required items needed in a timely manner and to work together as a team. As much as we try to make the process as easy as possible, the guidelines may require additional documentation than what was asked for up front after underwriting. Please don’t take this personally but understand that crossing the t’s and dotting the i’s is simple part of the process.