Buying a Home
Income and Assets:
___ Recent paystubs (usually two)
___ Names, addresses and phone numbers for employers,
past two years
___ W-2 forms for the last two years, if employed
___ Tax returns for the last two years, if self-employed
___ Business tax returns for two years, if a business owner
(own 5% or more)
___ Most recent three months’ of banking statements (all pages,
from all financial institutions where you have accounts)
___ Most recent three months of banking statements from all
accounts if self-employed
___ Year to date income statement if self-employed
___ Proof of other income, such as interest/dividends,
retirement income
___ Court papers and copies of cancelled checks for child support
or alimony payments you receive
___ Copies of most recent three statements from investment/savings
accounts, including retirement accounts
Debts:
___ List of current lenders, addresses, monthly payment, and
amounts owed
___ Bankruptcy discharge papers if you filed bankruptcy in the
past seven years
___ Copies of one year of cancelled rent payment checks, if you’ve
been renting
Other:
___ A copy of your driver’s license or passport may be required to
comply with the Patriot Act
___ Recorded copy of divorce decree/separation agreement if applicable
___ List of other properties you own, lender and loan balance, and
copies of signed leases if rented
Your Credit Report
Your lender will likely purchase a Residential Mortgage Credit Report which includes your credit information from all three major credit bureaus: Equifax, Experian and TransUnion. It will also include your credit score from each agency. This information will play a key role in what type of loan you get, as well as the interest rate you may pay. So it’s very important that you make sure it is accurate and up to date!
Although the lender will get your credit report, it’s a very good idea for you to order your own copy of your report from each of the three major bureaus as soon as you starting shopping for a home. You’ll usually need at least 30 – 60 days to fix mistakes or problems.
Surprises that pop up when you review your credit report may include:
• Loans for which you cosigned that have been late.
• Joint accounts assigned to your ex in a divorce that have been
late.
• Medical bills that you thought should have been paid by your
insurance company but were turned over to collections.
• Utility or cable bills that were due after you moved, but you didn’t
realize were outstanding -- or you disputed.
• Information belonging to someone with a similar name.
• Fraudulent accounts, in particular those related to identity theft.
For a free publication that will help you understand credit reports and scores, as well as a link to a resource where you can purchase a threebureau credit report, visit ConsolidatedCredit.org’s Learning Center.
The Mortgage Process
A lot of work must be done to ensure your loan is completed on time, especially when you buy a home and have a deadline written into the sales contract. The more you understand the process and are willing to work with your real estate and loan professionals, the quicker and smoother it can go.
After you sign a contract to buy a home, you’ll submit a mortgage application.
• The loan officer will gather your documentation and begin to
assemble the loan package.
• The appraisal will be ordered immediately to ensure your house is
worth the sales price.
• Any necessary inspections (such as a pest inspection) will be ordered.
• Your employment information will be verified.
• Your credit report will be ordered and reviewed.
• Your bank account balances, loan history on your current mortgage,
or other information may be verified directly with the source.
• You will need to shop for your homeowner’s insurance policy, and
order your own inspection if you are planning to get one.
• A title company or attorney will conduct a title search to make
sure there are no other claims to the title.
• A survey may be ordered to verify the property boundaries
and to make sure there are no unacceptable encroachments
or easements that could affect the property’s value.
When all the paperwork is completed, the closing will be scheduled. At the closing you’ll sign all the documents, funds will be transferred and you’ll be given the keys to your new home!
Don’t Sabotage Your Loan
There are some important things you can do to make sure you loan proceeds smoothly:
• Return your real estate and loan professionals’ calls quickly, and
provide them with any documents or information they need
right away.
• Don’t lie on your application. The information may be verified, and
could cause the loan to be turned down.
• Don’t quit your job before the loan closes. Your employment may
be verified the day you close!
• Avoid making any major financial moves until the loan closes. That
includes taking out new loans or adding to your debt. (Wait until
after closing to buy that new car!)
• Check in periodically if you haven’t heard anything about your
loan, but also give your loan professional time to work on your
file.
If You Have Damaged Credit
There are so many loan programs available today that you may be surprised by what’s available to consumers with less than perfect credit. Brian Sacks, author of “Yes! You Can Get A Mortgage” says that consumers with credit problems, even bankruptcy, can get a mortgage with low downpayments and reasonable interest rates. If you’re in this situation, look for a loan professional with experience in working with consumers with previous credit problems.
If high debt is keeping you from getting a loan, you may want to work with an experienced credit counselor who can help you work out a repayment plan with your creditors. Consolidated Credit Counseling Services Inc. helps consumers get out of debt in 3 – 5 years.
Credit counseling can have a positive impact on your credit by reducing your debt ratio, and because most creditors will remove recent late payments once you’ve made three consecutive on-time payments to the counseling agency. For a confidential consultation, visit www.ConsolidatedCredit.org.
