anchiy/gettyimages;Illustrated by Hunter Newton/Bankrate
Before you buy Refinance the houseyou will want to apply for pre-approval. This is a statement that your lender may be happy to lend you. To understand this, your lender will ask for a series of documents explaining your financial situation. Getting these documents in sequence before applying helps the process go more smoothly.
Pre-approval checklist for mortgage loans
| Paying stubs from at least the last 30 days | |
| Tax returns including W-2 from the past two years | |
| Bank statements including checks, savings and money market accounts for the past 2 to 3 months | |
| Employer contact information for the past two years. Some employers have employment verification phone numbers Lenders can make a call. | |
| If you are self-employed, business records | |
| Other evidence of income, such as bonuses, child support or alimony, disability benefits, pension payments, and social security. | |
| Account statement for 401(k)S, IRAs, CDs, mutual funds, other investments or retirement vehicles over the past two to three months | |
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If applicable, a down payment gift letter |
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| If there are multiple properties, information about other properties | |
| Loan statement – Auto loans, credit cards, personal loans, student loans, etc. – Last 60 days | |
| Credit reports and scores obtained by lenders with your permission | |
| Rental history including landlord contact information and proof of rent payment, such as cancelled checks and paid receipts. | |
| Each recent address and tenure | |
| A driver’s license, passport or other government-issued ID to verify your identity | |
| Social Security Card |
Pre-approval document for mortgage
Employment and income
Before the lender grants you a mortgage, you need to make sure you can pay off the loan. To prove your creditworthiness, you must provide income and confirmation evidence of being employed in the same company (or at least in the same industry) for two years, however in some cases you can qualify for a shorter employment history.
You probably need to provide:
- Salary stubs for the last 30 days, or 60 days if paid monthly
- Tax returns including W-2 for the past two years
- 2-3 months’ bank account statement
- Employer contact information you have had within the last two years. Some companies have a lender’s employment confirmation phone number
- If you’re there, a business record self-employed
- Proof of other types of income, such as bonuses, child support or alimony, disability benefits, pension payments, and Social Security.
“Lenders need to know that they have a stable income that can provide regular service to their mortgage payments,” says Alexei Morgado, founder of Lexawise, a real estate exam preparation company.
assets
To document your income Before approvallenders also need to document their assets. This will help lenders understand the other resources they can use to pay a mortgage if they lose their income. You may need to provide:
- 2-3 month retirement account statement including 401(k) and IRA
- 2-3 month investment account statement
- If you have other property holding information, such as vacation homes and rental properties
- If applicable, a down payment gift letter
liabilities
The amount you’ve come in is just one part of your financial puzzle. Lenders also need to know how much your monthly income you are already spending on other debts. This will help them calculate you Debt Income (DTI) Ratio And decide how much you can spend on a mortgage and what’s your loan interest rate. Your lender will want a last 60-day statement related to you.
- Automatic loan
- Credit Card
- Student loan
- Personal loan
“As part of the eligibility, they will compare their monthly debt to their monthly taxable total income to ensure that it meets the (acceptable) debt-to-income ratio.” Ideally, with traditional loans, most lenders would want less than 36% of your income to go towards debt payments and potential mortgages.
Credit History
Before your lender approves your mortgage, you will need evidence of how you handled your past debt, including whether you paid back your balance and consistently on time. your Credit Profile The lender can also check if you have filed for bankruptcy or have unresolved delinquents.
As part of this review, the lender will obtain your credit report and Hard credit check.
identification
Verifying your identity is another part of the pre-approval process. You must provide government-issued ID documents such as:
- driver’s license
- Social Security Card
- passport
- State or federal ID cards
- Tribal ID Card
Additional documentation required for special circumstances
“In special circumstances, additional paperwork is required,” Morgado says. “All additional documents will help fill in the specific types of risk that lenders need to calculate before providing pre-approval to applicants.”
You may need to add your lender.
- I already own a house. Your lender will want to know how valuable a home is, the monthly costs associated with it, and the status of its residence. In other words, if you can earn money from it. If you have a mortgage in your home, your lender would also like more details about it.
- Self-employed: Being a self-employed person won’t prevent you from getting a mortgage, but you’ll need to provide more documentation than full-time employees. Lenders may require you to submit your income statement, a list of accounts receivables, or 1099 or other documents from the beginning of the year.
- Incompatible or Non-QM loans: These loans do not comply with certain federal standards for mortgages, including rules regarding the size of the loan and required income documents. You may need to meet more stringent eligibility criteria – for example, if you are looking for Jumbo Loanone type of non-conforming loan – or you may need to provide various evidence of income or credit management. This may include proof of rental income or rental payments to the landlord.
- Use the benefits of a veteran: Applicants seeking a VA loan must include a Certificate of qualification (COE) Published by the U.S. Veteran Affairs Bureau. COE confirms eligibility of appear.
