You are still bursting with pride that you were able to get your Federal income taxes filed on time. Now you want to move on to your next goal: buying a home. So …. Wait ! Before you file all that paperwork away there are some steps you can take to make use of all your great tax preparation work.
Although the mortgage process has always required a certain amount of documentation, more items are requested from borrowers than ever before. The GREAT MORTGAGE crash of 2008 taught lenders that the best results for repayment are to lend to borrowers who are actually qualified for the mortgage they are trying to get. So now there are fewer “gimmick” programs and lenders try to verify borrower information before locking into a long term mortgage with them.
The documentation game is not HARD; but it pays to be ready … and it pays to know what to expect. The biggest areas of documents needed are those concerning 1) income and 2) the money needed to close. Since you just finished that tax return make sure that you have a nice, neat file to save your Federal tax return and all of your W2s. If possible, turn your paper return and W2s into a file saved on your computer so you can easily provide it to your lender. Most borrowers need 2 years of tax records. Many company payroll department use websites to house pay stubs. Make sure you know your user names and passwords so you can provide pay stubs when requested by your lender.
Another area of paperwork needed is to be able to show you have enough money to make a down payment, pay closing costs, and be left with some cash in reserve. Fortunately, most banks offer online banking and it is easy to download account statements for checking and savings accounts. If you are pulling cash from a 401K, however, you may find that statement a little more difficult to get. You may have a copy among those papers for your tax return – so hang onto that. Check with your HR Department to make sure you can access your 401K website to update statements.
Putting in some thought ahead of time can help you be more prepared to move forward quickly with your mortgage financing. And remember …. for best results, contact a qualified mortgage professional and have them review your WHOLE situation. There may be unique parts of your finances you need to document and MORE of those documents may be among that tax file you haven’t yet filed away.
Mortgage Loan Originator