The mortgage process can be a very stressful event for many people due to a lack of preparation. Whether you're refinancing your home or purchasing a piece of real estate, the same information will be required. Learning what information you'll need and how to prepare for a mortgage will eliminate the many issues involved and will help make the whole event run smoothly.
When preparing for a mortgage, the first thing you should do is examine your personal credit. Request a copy of your credit report to make sure that it doesn't contain any errors. If it does, report the discrepancies to the credit reporting agency for verification and correction. Since a lender for a mortgage will be looking at your history of paying bills, it's important to pay your credit cards, loans, and other bills in a timely manner. Keeping a copy of any bills that are paid in full will help a lender calculate a accurate debt to income ratio.
Since assets are another important part of getting a mortgage, you'll want to gather a copy of all current bank and investment statements. The lender will examine these statements for large deposits, cash deposits and overdraft fees. If large deposits have been made, be prepared to document where the deposit came from. The same is true for cash deposits. Unless a cash deposit shows the same amount of money deposited each time, which clearly matches pay stubs, it may be questioned. Lenders will not accept statements with overdraft fees unless there is documentation that it was an error. Keeping bank statements clean and free of questionable marks is vital when preparing for a mortgage.
Most of us don't buy our homes outright, so a down payment will be necessary when buying a home. To complete the transaction, the lender will verify your assets and available money. They will examine your savings history and make sure that a person is well prepared for potential expenses such as home maintenance. To prepare for this, you should be able to show that you have the necessary down payment and are able to save money.
Lenders will also require your pay stubs to verify current and consistent employment. A written or verbal verification will also be completed. Any lapse of employment for more than 2 months will require a written letter of explanation. A change in profession may also require a written explanation.
Keeping important papers available will assist the lender and make the transaction move quickly. Documents such as divorce papers, custody and child support documents and disability determinations should be readily available. If you're refinancing, submitting the previous title and survey of the property to the lender can also save you time and money.
