What You Need Before You Talk to a Lender: Ready is Better!


couple researching loan application

When it comes time to apply for a mortgage, many people are confused about what paperwork they may be required to show. Knowing what you need upfront and having it ready can relieve stress and save time. Remember, they are interested in your employment history, how credit-worthy you are, and the overall picture of your particular financial situation. Because of this, here is what you should gather as you get ready to apply.

-A copy of your state driver’s license, both the front and the back. ID verification is a priority and mandatory since the Patriot Act.
-Another ID for secondary verification. A passport or Social Security card is a good choice.
-Two of your most recent paystubs, preferably in consecutive order.
-W2’s for the past two years.
-Two months of bank and financial account statements. Include all the pages!
-A copy of all the pages of your signed business and personal tax returns, plus all schedules connected with them.
-The completed purchase contract for the new residence. After all, this is why you want the mortgage!
-The name and all contact information for your attorney. This will make arranging the closing a lot easier. Easier is always better in situations like these.

There are also a few other things you may need depending on your circumstances. If you are self-employed, be ready to reveal your most recent year-to-date or quarterly profit and loss statement. If you are refinancing, the lender may want to see your monthly statements for your mortgage or any current lines of credit or home equity loans on the property. They may also want to see the deed to your property. If you are currently renting, have your landlord’s name and number handy. This way the lender can verify that you have paid your rent on time.

The lender will also get your okay to run your credit rating. It is all part of the picture. Be upfront with your lender. If there is some credit problem, talk to the lender about it. They will find out eventually, and trying to hide it by not disclosing it or stalling on giving them the appropriate paperwork will only delay the entire process and possibly hurt your chance for getting approved.

When it comes to your credit report, be ready to explain if there are some glitches. These might include late payments, collections, charge-offs, or even credit inquiries for the past three months. Some people opt to run a credit report ahead of time to make sure there are no mistakes and correct them if there are. It’s a good idea. Running it earlier is better, because sometimes things can take a while to clear up.

One other trick is to set up an account strictly dedicated to holding your down payment and closing costs. Ideally you should have all the money for these expenses set so no more activity occurs with this special account for about two months before you apply for a mortgage. It helps you look even more financially stable to lenders.

Yes, applying for a mortgage can seem intimidating. But some planning and organization can make the whole process go much more smoothly.

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