This is a question you might ask yourself when people say, “Make sure your loan housefinancials are in order.” What does that mean and what do you have to get in order?

When you’re getting ready to buy a house, you must understand that the bank is going to request a lot of information from you. They are going to request documents that prove your income, show your previous tax filings and verify your assets.

Importance of Necessary Purchase Documentation

This requirement is not waived for anyone so there is a very clear, descriptive list of what you’ll need. Remember as you’re gathering these papers to keep everything in its original form. If anything changes later on, you can submit a revised version of that document. However, if you manually change items on the form, they are going to request an updated and correct version right then.

If you have been paying rent up until this point, they will ask to see how much you pay and to whom. Gather your rent receipts and make a spreadsheet of each payment you’ve made to date. This will give the potential lender something to verify as they review each of your receipts. Of course, if you’re able to scan these receipts into a single document, that will be easier on you.

Verifying Current Income Amounts

For your current income level, they will request W-2s and paycheck stubs. If you already keep these in a file, then you already have them in one place. However, if not, you may want to ask your employer for copies of the paycheck stubs back to a certain point. If your paychecks are directly deposited into your account, then you can simply print off a bank statement for each month that is requested.

Money that you make from investments is also going to be counted. If you have interest-bearing accounts or another form of investment, you’ll need to show them with proper documentation. This information also shows up in your tax returns normally, so you may use those as a substitute. However, be prepared to answer questions with documentation explaining any investment changes took place since you last filed taxes.

Requirements for Self-Employed Homebuyers

Those homebuyers who are self-employed need to show a paper trail as well. Make sure your profit and loss statements are current and available for review. This proves your income, your business expense and ultimately, how much you bring home. Most of the time, the bank will ask for 12 months of previous documentation to get an accurate picture of your income.

Of course, if you own other real estate, you will need to show this as well. Rental income can be very helpful when you don’t bring in enough from your regular job. Make sure you have all the addresses and housing information describing the location.

Explaining Recent Financial Gifts

If you have been given a financial gift recently, you need to explain this as well. It may even include acquiring documentation from the gift giver to show where the money came from exactly. Your loan officer can discuss this with you and let you know what is required to process that portion of the loan application.

Once you have everything together, then your part of the loan process is complete. This is why getting this information ahead of time is helpful—it cuts down on questions and additional time you have to spend.

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This is filed under Home Loans/ Mortgages.


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