While the homebuying process can be a bit confusing if you haven't requested the help from an industry professional, so can qualifying for a mortgage.
Before you start the mortgage qualification process, collecting all the proper materials you will need can make the task go smoothly. While the required documents can differ from lender to lender, there is some basic information you will need to provide.
A lender will most likely want your tax returns and W-2 forms from at least the past two years. These documents provide a thorough outline of your financial history, such as your income and other revenue streams. Simply put, this can reveal if you make enough money to afford the investments.
Employment history and proof of income
Some lenders may not require an extensive history, but most will want some proof that you currently have a job. This can be accomplished by providing a pay stub that has your name and Social Security number listed, as well as your year-to-date earnings. While any pay stub from the year could be sufficient, certain lenders may need to see one from the most recent month.
For many people, the money they receive from their primary employer isn't their only source of income. If you have a second job, make bonuses or commission, regularly make interest on stocks and bonds, receive Social Security or veteran and retirement benefits, this is all information a lender will want to know about.
Providing an employer with your credit history doesn't just mean outlining the spending habits you have with your credit card. Instead, a lender will want to see all current, and possible past, lines of credit you have open. This can include student loans, car loans and other general lines of credit. Also, you should expect to show proof of your minimum monthly payments and total outstanding balances.
Home sales contract
If you haven't been preapproved for a mortgage, but come across the dream house you want to buy and have reached an agreement with the seller, when you approach a lender, be sure to provide them with a copy of the sales agreement. This can give them a better idea of how much money you actually need, rather than providing a rough estimate during the preapproval process.