Purchasing a new home or refinancing an existing home can be stressing. It may even be more so, if you're a 1st time buyer & don't quite know how things go. Delays are inevitable. However when it comes to mortgage applications, regardless if we are talking about pre-approvals, approvals or refinancing, there are several things you can do help minimize delays, due to incomplete &/or missing information.
If you are going to apply for a mortgage pre-approval or approval, or if you are going to refinance an existing mortgage, there are several things you should do to get your affairs in order, before heading to the mortgage application office.
You should start by taking stock of all your current expenditures, debts, credit cards, cash flows, bank accounts & other financial assets you may have. Cobble that information into a simplified budget report & asset list. This should help give you a better idea of what you are paying out each month, what you are receiving each month, and where all of your assets are located.
Next, you should gather together the following paperwork:
- Tax returns for the past 2-3 years
- W-2 forms for the past 2-3 years
- Pay stubs for the past 3-6 months, with year-to-date earnings statement
- Bank statements for the past 3-6 months
- Recent statements for the past 3+ months, of any other assets you have
- Recent mortgage statement
(if you happen to have a mortgage already)
- Copy of deceleration of home owners insurance, w/paid receipt.
(if you happen to have it)
- Legal Photo ID
(i.e Drivers License or Passport)
- Copy of your Social Security card
(having the original is better)
- Copy of divorce papers
(if you happen to have been divorced)
- Copy of purchase and sales agreement
(if you happen to have one)
If you were lent, borrowed or were given a large sum of money from someone (such as from a family member) & it was deposited into your bank account less then 90 days ago, you will need to show a copy of that source's bank statement, with a copy of the canceled check or money transfer. This is necessary to prove to lenders how and when you received the funds. This elevates any concerns over money laundering.
If you happen to have created & stick to a budget, you should bring a copy of your current budget, with a list of how it breaks down per category.
If you have any other important papers (such a paperwork of a recent inheritance, annuities, life insurance policies, etc..), which you believe would be useful or possibly needed, bring those papers as well. It's better to have the papers, should the mortgage lender ask for them, then not to have them at all. Worst case, you don't use them. Over prepared is always better in this case.
With the major documentation part is out of the way, you should now turn your attention to your credit history.
You should pull your credit history report, before you apply for a mortgage; as you need to know exactly what your credit report says about you. Lenders will pull your credit history & FICO score, to help determine your credit worthiness. So read over your current credit history report before hand. Clear up any inconsistencies &/or errors within your credit history first, before submitting the mortgage application. If you cannot account for each & every entry within your credit report history, you are not ready to apply for a mortgage.
(* Side Note: There is no need for anyone in the US to not know or obtain their credit history; as US residents are legally allowed to pull their credit report for free, via each of the big 3 [Equifax, Experian, and TransUnion] once a year, using this website: annualcreditreport.com)
For anyone co-signing a loan or mortgage application with you, they should also have the same list of papers/documents available. They should perform the same review of their credit history report, as well.
Lastly, before applying for that mortgage or sitting down with a mortgage lender, you should vist their website or give them a call. This way you can determine is there is any other minimally required documentation or paperwork they will need in order to initially begin working with you.
If you follow this outline when you apply for a mortgage, the process should be a lot easier, less stressful & the application process is quicker; because you are avoiding many of the common things which typically delay a mortgage application's submission & approval process.
If we have happened to forget to mention some specific paperwork/document to bring, or some other process to perform before applying for a mortgage, please post it in the comments.