Mortgage rates are at all-time lows, leading many people to think about buying a home in the coming year. Anyone who is thinking about jumping into the real estate market will want to get their financial information in order. If you have already completed the Home Purchase Worksheet and decided that buying a home makes financial sense for you and your family, gathering the documents that may be needed to apply for a mortgage could be your next step.
The number of documents you may need may seem overwhelming, but if you organize your effort around types of documents, such as employment, tax, real estate, assets, and debts, you’ll get through it with your sanity intact. Here’s a guide to help you do just that.
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What employment documents do I need to buy a home?
Your lender will want to see that you have stable employment before you can get a mortgage to buy a home. This can be done by providing pay stubs and W2s. Some lenders, however, will want to see your hire date and employment status. You can provide this information in a letter from your current employer. In addition, you may need to provide your employer’s contact information, including business name, address, and HR representative’s phone number when you apply for your loan.
What tax records should I gather?
Your W2s are considered part of your tax records, and most mortgage providers want to see them. buying a home can be trickier if you are self-employed or earn income from a non-traditional source. Most of the time, your lender will want to see two years of tax records to prove that your business or self-employment is valid and profitable. Lenders rely on this information as proof you are gainfully employed and can afford to pay your mortgage.
If you have had a sudden change in employment or income, you may have to submit additional years of tax returns. You can contact your lender to explain the situation, then determine what additional tax documentation is needed. This may also be the time to enlist a real estate lawyer to help ensure all of your documentation is in proper order.
What financial documents do I need to show the lender to buy a home?
The lender will access your credit score to examine your debt-to-income ratio and overall credit history. If you have outstanding loans, you may need to show documentation, which might be in the form of statements with account balances. Gather the names, addresses, account numbers, monthly payment amounts and outstanding balances of each account, if you can, into one document to make it easy for your lender to review the information all in one place.
Lenders also like to see information about assets. This starts with your bank statements, and includes 30 to 60 days of transactions. If you have a business, year-to-date profit and loss statements are helpful.
All of your assets count toward your home buying power. If you have IRAs, stocks, bonds, CDs, or other securities, bring statements showing their value. If you have money for a down payment, then demonstrate this through your bank statement. Any additional income, like disability payments or dividends, also need to be part of your financial information packet.
What real estate or residential history documentation do I need?
Make a list that includes your home addresses and landlords’ names and contact information if you rented for the past two years. If you are a homeowner, you will need to provide proof of home ownership or proof of sale. If you own non-residential property that is considered an asset, you will need to provide proof of ownership.
Buy Confidently With Rocket Lawyer
Buying a home is a major investment. Rocket Lawyer can help you navigate the process with customizable Real Estate and Home Ownership Documents and professional legal advice. Use the Intent to Purchase Real Estate letter to write down the negotiated terms for your offer. After you complete the sale, use the House Moving Checklist to ensure you have everything lined up to move into your new home. If you run into legal problems along the way, reach out to a Rocket Lawyer On Call® attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.