Here’s what we need to review for a typical loan pre-qualification:
- The two most recent federal tax returns you’ve filed. Please include any W-2, K-1 and/or 1099 forms and all schedules related to the filing. We do not need your state filings.
- Most recent month’s paystubs (We need a complete 30 days)
- Most recent two months of bank statements and retirement statements(if applicable)
- Copy of driver’s license and Social Security card.
- Any applicable bankruptcy filings, divorce filings and VA eligibility paperwork.
- For a refinance we’ll also need your most recent mortgage statement and homeowner’s insurance policy information
Why do we need all this documentation?
The tax returns verify that the income you are showing is being reported to the IRS and on the up and up. We also look any losses you might be reporting, whether it be unreimbursed employment expenses on Form 2106, rental losses on Schedule E or self-employment losses on Schedule C. It also shows if you currently own a home, which is relevant to both your first time homebuyer status and to your debt-to-income ratios. The tax returns will also show your history of income so that we can determine the consistentcy and stablity of your income.
The paystubs will show how much you are making now, in case you are making more due to a raise or a promotion. They also show you are still employed!
The bank and retirement statements show where the down payment is coming from on a home purchase. On both a purchase and refinance it can help to show “reserves” – money saved up to cover the housing expense in the event of a emergency. One month’s housing expense (mortgage payment, taxes, insurance, HOA) in a savings account is considered one month’s reserve. The more months you have in reserve the stronger of borrower you are. Some programs require reserves, so knowing what is available can help me tailor the loan program to your situation.
The driver’s license allows us to verify your identity in these days of identity theft and corroborate your personal details.
The Social Security card shows us your legal name. When we run a credit report it has to match the Social Security card exactly; nicknames and missing additional surnames can provide incorrect returns on your credit profile.
The bankruptcy (BK) and divorce filings are not always necessary but when they exist we need to see them in order to anticipate any possible underwriting challenges. We need to see how property was disposed in the BK and which debtors were discharged. From divorce decrees we can see if you are responsible for child support or spousal support, both of which are factored into your debt-to-income ratios. If you are a veteran then Veteran’s Administration (VA) paperwork will let us confirm your VA loan eligibility and the terms thereof.
On a refinance we need the mortgage statement to verify your escrow impounds, your address, the current balance of your loan and the terms thereof. Similarly your homeowner’s insurance lets us verify the coverage and the cost of your insurance (which, you guessed it, factors into your debt-to-income ratio).