Home Financing Checklist
Congratulations on deciding to purchase a home. The process is quite involved and will touch many areas of your life. One area is your financial picture. For most people, purchasing a home will require a loan. If you are obtaining a conventional loan, FHA loan or a VA loan there are several documents you will need to gather. I provide this checklist so you can begin the process now.
Step 1: The Loan Officer
The key in a successful home purchase is to have a top notch loan officer to guide you through the process. I have written in previous articles about a guideline of how to handle your finances during the purchasing process. I suggest you read it.
If you were buying a car you would travel to different dealerships. You would talk about the cars, their strengths, and what the dealership could do for you. You would visit multiple lots to make sure you are getting the right car from the right company.
I recommend you take the same approach with your home loan. Do not talk to just one loan company; talk to several. Each has strengths and each has challenges. You need to find the right one for you. As a real estate professional I work with several lenders. And I always recommend my buyers speak to several.
In your first conversation they will begin to get to know you, your needs, and your goals. They will discuss your income, assets, liabilities, and any other property you own. Their goal will be to begin to figure out what type of loan best fits you.
Step 2: Picking the Loan Officer
Now that you have interviewed several loan officers you need to choose one. Make sure they fit your personality. You will have many conversations with them over the next couple of months. You need to pick someone that you like. Now the fun begins.
At this point they will really begin to dig into your financial records. This is a good thing. You want to go home shopping knowing that you have a pre approval letter from a bank. It provides security for you but also makes your offer stronger in the eyes of a seller. As a listing agent I require all incoming offers to have a pre approval letter along with the offer.
The remainder of this page will be discussing the documentation you will need to obtain a loan. So, even while you are interviewing prospective loan officers begin to pull this information together.
Step 3: The Mortgage Documentation
- Pay stubs; all jobs, all borrowers – typically anywhere from 2 most recent to 2 most recent months
- Federal Tax Returns, 1040 – past 2 years
- W-2’s – past 2 years
If you have been employed less than 2 years, have a gap in employment in the past 2 years, or you are self employed you will be required to submit more information.
Business Information (if own your own business)
- Tax returns up to 3 past years
- Profit/Loss statement; year to date
- Evidence of business expenses; 6 months of business bank statements
Additional Property Owned (for all owned property)
- Latest mortgage statement
- Property tax bill
- Copy of home owners insurance
- Verification of HOA dues
- Leases for all properties you are renting out
- Asset statements; items you own, example cars
- Checking, saving, Certificate of Deposits, retirement and investment statements; 2 months for each
- Letters of explanation for any credit history dings; late payments, collections, etc
- Letter documenting any large deposits into any account outside of standard pay checks
- Verification of gift source including a gift letter stating it is a gift and not a loan
- Any judicial decrees (example child support)
- Bankruptcy discharge papers
- Copies of certain bills (gas, electricity, car loans, etc)
- Copy of your Drivers License and Social Security Card (bring originals with you to verify copy)
Contact Information (names and phone numbers)
- Real Estate professional: David Cairns, 619-937-5871
- Employer (all borrowers)
- Home owner insurance agent (shop around and find the best one)
- Landlord; if applicable
- Property Management Company; if applicable
- Lawyer; if applicable
Whew! I told you there would be lots of documentation required. And there might be even more depending on your circumstances and type of loan. For example, if you are looking for a VA Loan you will need either your DD-214, NG form 22, or Statement of Service. But I think this list will get you most of the way there.
In your home purchase you will have a very close working relationship with both your agent and your loan officer. The number one detail is honesty. Disclose everything because it will be discovered. If we know of any challenges upfront we can work on how to handle them. Last minute surprises kill deals.
I hope this helps you prepare for the loan to get your new home!