How To Get Ready to Submit Your Loan Application

09 Oct

How To Get Ready to Submit Your Loan Application

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By Doug Goelz, Mortgage Services

For many borrowers, the most frustrating part of the loan process is gathering all the documentation a lender wants.  Assembling the paperwork can take hours at a time when borrowers are making plans to move while juggling work and personal life.  Yet, gathering the necessary paperwork is a time-critical first step in the loan process, and a necessary step in getting into your new home.By knowing what a lender will ask for, potential borrowers can take several steps even before they get into contract on a house to hasten the documentation gathering.

It will always be faster and easier if you can provide electronic versions of the documentation needed.  If you don’t have access to electronic copies of the documents, and don’t have a scanner at home, make scans elsewhere of everything you can in advance of getting into contract.  Even if some of the documentation has to be updated (e.g., with your most recent pay stub or bank statement), having most of it in electronic format before you even start the loan process will save you time once the loan process begins.  You can save days in the loan process just by having electronic copies of the documents ready when you (and the lender) need them.

Here is a list of basic documents a lender will ask for up front, and steps you can take to make getting them and updating them easier:

Documentation Lenders will Ask For Make it Easy to Gather & Update
1) Pay Stubs covering a recent 4 week period Have online access to your pay information at your company so you can get the most recent electronic copies.  If your home search takes a while, you want to make sure you have easy access to the most recent 4 weeks of pay stubs.
2)  W2s for the past two years Scan copies.
For self-employed borrowers and borrowers who own other properties:

3) The two most recently filed Federal Tax returns.  If you are on extension for the current year, also provide a copy of the filed extension.

Sign and date on page 2 of the Form 1040 (taxpayer’s copies of 1040s often aren’t signed on page 2, but lenders will require a signature).  Then, make electronic copies of your complete filed federal tax returns (include all schedules and notes) and extension (if filed).  Copies of state tax returns are not needed.
For borrowers employed by their own S corporation:

4) The two most recently filed Federal Tax returns (probably Form 1120) for the corporation.  If you are on extension for the current year, also provide a copy of the filed extension.

Scan copies.
1) ALL PAGES of asset statements for the most recent 2 months or quarter. Have access to the online services offered by your financial institutions, including your 401(k) provider.  Almost all financial institutions provide online access to statements so you will be able to provide the most recent statements quickly in electronic form.
2) Clear, legible copies of government issued photo ID Scan or take a photo of your driver’s license or passport.  Everything on the ID needs to be legible, so a photocopy generally will not suffice.
If you own other properties (or are refinancing), for each property owned:

3) A recent mortgage statement

4) The insurance declaration page

5) Property tax bill

Scan copies.
If you have been renting and are now buying:

6) Copies of cancelled rent checks for the past 12 months

As with your bank statements, if you have access to online services offered by your financial institution, it should be easy to get copies of cancelled checks online.  If you don’t have online access, ask your bank for copies of the most recent 12 months NOW (it may take the bank a week or more to provide older copies of cancelled checks).  You can update the collection with the most recent checks if your home search takes a while.

Once you are ready to submit a loan application, on top of all the documentation above, your lender will have another stack of disclosures that you will need to sign and return.  Many of these disclosures cannot be produced until the property address is known so your lender won’t provide them until you are in contract.  Nevertheless, by having your personal documentation collected and easily accessible, the loan process will be easier and faster once you are in contract on a property.

Questions?  Feel free to get in touch with me at 415-730-4665 or doug@emortgageservices.net