When you begin shopping for a mortgage, make sure you compare identical loans to each other and ask for a good faith estimate (GFE) from each lender. This way, you can compare costs for each mortgage loan type. Your buyer's closing costs will probably include a loan point or two.
Before Talking to a Mortgage Lender
Pull a copy of your credit report and examine it. You are entitled to a free annual credit report from each of the three credit reporting agencies. If you find a mistake, contact the creditor to get it fixed. Note delinquencies. If you have too many late payments, your FICO score will be adversely affected.
To begin processing your loan, a lender will verify your employment through a verification of employment form. Give your employer a heads-up to expect to receive that form. Ask your human resources department to send it back right away. In addition, the lender will want the following paperwork from you:
Documentation Needed to Buy a Home
- Current Pay Stubs.
Your last two pay stubs will suffice. Make copies and don't hand out your originals.
This is your wage and tax statement, issued by your employer for a calendar year. It is what you attach to your tax returns. Lenders generally want the last two year's of W2s from both of you.
- Federal Tax Returns.
If you haven't yet filed your tax return for last year, then find the two previous year's of tax returns. Make copies. Include all schedules. Tip: Make sure the tax returns are signed by you.
- Bank Statements.
Some lenders want two months, while others will demand the last three months of bank statements. Make a copy from each lending institution. Include every page of each bank statement.
- Asset Statements.
If you own stocks, bonds, mutual funds or retirement accounts, make a copy of each statement. Lenders prefer hard copies over those printed online but will accept online statements if that's how you receive your statements. Make copies.
- Copy of Current Driver's License.
If you are meeting with the lender in person, you can bring your driver's license with you for identification and reproduction. Otherwise, copy your license on a scanner or copy machine and include it. Your license should have a photograph of you.
- Ask About Upfront Costs.
Many lenders will request a credit report fee, but some do not. Generally, appraisal and credit report fees are paid in advance when you are ready to accept the loan. Do not pay any fees to a lender until you have elected to use that lender.
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.