So you’ve found the house you have been looking for. It fits your needs and budget and now it’s time to apply for a loan. Getting a loan is a little easier than a few years ago but it can still be a challenge for some.
Scotty Ball, a real estate attorney, with Stewart, Melvin & Frost, is with us this morning to talk about what information you need to provide your lender when you apply for a loan.
Question: Income is certainly a key part of a loan application. What does the lender need?
Scotty: You have to show proof of income for everyone who will be on the mortgage application. This includes pay stubs; W-2s form the last two years and your tax returns for the last two years, as well. If you are self-employed, it’s a little different. You’ll need your year-to-date profit and loss statement and balance sheets prepared by your accountant.
In many instances, you will need to provide other income documents such as Social Security and Disability payments, pension income, dividends from investments, child support, and alimony. In addition, your mortgage provider will require proof of any assets you claim on the application including bank account statements from the last three months, stocks and life insurance policies. If you are receiving a monetary gift toward your home you will need to provide a gift letter that says how much and from whom.
Question: What information is required to show what debt you have?
Scotty: Your debt is the other part of your financials that the lender will need verification of.
And this includes debt such as current mortgage or home equity lines of credit if you have either. Also you need to include car loans and credit card accounts.
Question: We’ve discussed the financial part of applying. What else is needed to complete the application for your new home?
Scotty: There a few items needed. First, you will need a fully executed copy of the purchase agreement of the house you a planning to purchase. If it is a new construction loan, you may need to provide copies of plans and specifications. You will need a legal description of the property being purchased and a copy of the listing sheet, which is information about the home for sale. Your real estate agent can provide both of these. And you will need to provide a list of your addresses from the last two years. If you were a full-time student during the previous two years, you will need to furnish a transcript or diploma.
Question: Is there details you need to provide if you are selling your current home?
Scotty: Yes. If you have a buyer for your current home and are in the process of completing that sale, you’ll need to provide the fully executed contract of sale along with copy of the HUD-1 closing statement on the home before closing on the new home.
The HUD-1 is standard form used to itemize services and fees charged to the borrower by the lender.