Real estate mortgage loan: how to prepare to save money
In addition to your credit score and the five other requirements you must meet to finance a real estate mortgage loan, you need to gather papers and documents. Streamline your financing and make your life easier. Organize your documents in a three-ring binder or file system. You will not need all the documentation listed below. However, the more information you collect, the more likely you are to get the best loan rates. Keep in mind that you may not need all of these documents for all types of loans.
Documentation Required for Real Estate Mortgage Loan
Whether you want to buy your first home or a lot of investment properties to build wealth, this checklist will help you save money on borrowing costs.
1. Proof of income
Include copies of your last two pay stubs or other proof of employment and income verification. If you receive fixed income, such as trust income or social security, please include the beneficiary’s letter indicating how much you receive.
For the self-employed, you will need to show that you have been in the same line of work or business for two years or more.
If you are self-employed, show a copy of your two or three year business license to show that you have been in that business for at least two years. If you don’t have them, show what you have to show that you have been in business for at least two years in the same line or field of business. You can also ask a CPA to amend your income tax returns for the previous two years and then write a letter verifying that you have been self-employed for at least two years.
2. Tax returns
Provide tax returns for the last two years or at least the last two years of W2 and/or 1099 forms if you do not wish to release tax returns.
If you are self-employed, the mortgage company may require your personal and business tax returns for the previous two years and your business’s Year-to-Date Profit and Loss Statement. If you are a business owner, you may need a Business Financial Statement prepared by an accountant.
3. Bank account records
Gather your account numbers, your bank branch address, along with checking and savings account statements for the last two to twelve months. In most cases, you only need bank statements for the last two months. Most lenders will only need twelve months of bank statements when trying to get a “full doc” loan (with the best rates) instead of self-employed reported income. Talk to your loan officer about whether twelve months of bank statements will help you get a better rate.
Include all bank accounts, savings accounts, retirement accounts, and investment accounts. Include any accounts you sign for, even if your spouse also signs on the account, and even if your spouse is not applying for the loan with you. Lenders consider financial assets like these important as a reserve, especially now that property values aren’t rising as quickly.
4. Driver’s license Y social security card photocopies
5. Proof of housing payments
Whether you own or rent, you must document your housing payments. Credit reporting agencies list mortgage payments. Please provide copies of your mortgage statements or a copy of your lease with twelve months of checks showing rent payments on time.
If you rent your home to a professional management company, they can verify that you paid your rent on time. If you are renting from an individual, most (but not all) lenders will require you to show canceled rent checks for twelve months.
6. Main assets (Other owned real estate, automobiles, boats, antiques, stocks, etc.).
You do not have to include individual shares if you own shares in a mutual fund or hedge fund. Please only provide the latest statement of funds. Include the cash value purchased from the whole life or universal life insurance policy, if applicable. (Cash value is not the same as face value. Cash value is what you would get from the insurance company right now, if you gave up the policy while living.) If there are antiques or other collectibles, please provide only the full value of the collection. ; you do not have to detail.
7. List of debts (car loans, furniture loans, student loans, and credit cards)
Although the debts will be on the credit report, you should be aware of all your debts so that you can tell if the credit report has errors. Include any debt you co-signed, such as co-signing a child’s car.
8. Divorce Settlement Papersif applicable, no matter how far back in time
9. Delinquent or inaccurate debts or credit report items
If you paid a collection, judgment, or lien (especially a tax lien or other lien against your home), include proof of payment.
10. An irrevocable gift letter if you are receiving a monetary gift from a relative.
11. Purchase Agreement (for new purchase).
Please provide a copy signed by both parties, including all signed disclosures.
12. Necessary items for a refinance
Provide copies of your note and deed of trust, homeowners insurance statement page, copy of your latest property tax bill.
13. If you own investment real estate in your name, you need rental agreements for each of your properties, in addition to the items listed in #12 for each of your properties.
14. Bankruptcy
Provide all pages and schedules of any bankruptcy filing within the last seven years, and the discharge sheet, for any type of bankruptcy (Chapter 7, Chapter 11, or Chapter 13). The bankruptcy must be discharged before the loan application date.
Preparation leads to financial freedom
Talk to your loan officer to see what documents you need to copy and submit. Prepare your credit and real estate mortgage loan documents so you can buy your dream home and even multiple investment properties.