The loan application process sure can be a nerve wracking experience! To fully prepare, I want to give you some tips on how to choose a lender and what paperwork to take with you when applying.
The first thing you need to do is choose the bank/financial institution you plan to work with. I would always recommend first checking for the best interest rates. I have also found that working with a local lender is usually leads to a much smoother transaction and, of course, a personal connection.
Applying for and securing a loan requires a deeper look into your personal finances. Once you’ve selected your lender, you’ll start working to obtain your approval. You will be asked for what seems like a multitude of documents – but I assure you this is necessary. Collecting the most common documents ahead of time will further you in the process, avoid surprises and impress your lender!
When you’re ready to start, have copies of these documents ready for submission:
(obviously, not all will apply to every situation)
1. 3 months’ bank statements on ALL accounts, including your 401K
2. Copy of social security card
3. Copy of driver’s license
4. Last two years’ W-2 forms
5. Most recent pay stubs covering a 30-day period
6. Federal tax returns (1040’s) from the last two years, if:
- You are self employed
- Earn regular income from capital gains
- Earn more than 25% of your income from commissions or bonuses
- Own rental property
- Take non-reimbursed business expenses
7. Copy of the HUD1 Statement Settlement on recent sales of homes
8. Gifts:
- Gift Letter (for funds from family members)
- Donor’s bank statement
- Copy of gift check
- Copy of the deposit receipt
9. Landlord’s name, address, and phone number (if applicable)
10. Explanations for any late payments. (Note: credit inquiries last 90 days)
- Charge-offs
- Collections
- Judgements
- Liens
11. Copy of bankruptcy papers filed within the last seven years (if applicable)
12. Year-to-Date Profit and Loss Statement (IF you are self-employed)
13. Corporate or Partnership tax returns (if you own more than 25% of a business)
14. Copy of purchase agreement (if you have already made an offer on a home)
15. Receipt for child support payments (if applicable)
16. Copy of divorce settlement (if applicable)
Once you have supplied all the necessary documents, the waiting begins – and definitely DO NOT make any large purchases or payoffs during the application process without discussing with your lender. I have seen this very thing cause a loan to be denied – so beware!
For further requirements and additional clarification contact the financial institution of your choosing. They will be able to provide their specific guidelines and inform you of any additional paperwork they may need. If you need recommendations of local lenders, please let me know. Drop me a line – I’d love to meet with you to discuss!
Have a beautiful day!
Diane