Financing documents and requirements in a real estate transaction
After all the ins and outs and ups and downs of the real estate market, lending institutions had to tighten up their requirements in order to do the home financing. More and tighter regulations require banks to do a thorough determination of the possibility of giving a mortgage loan. They need to have a good overview of all the different aspects of your financial life: your assets, your taxable income, your current mortgage or rent payments and much more.
Having the best possible credit history by the time you want to pursue getting a mortgage loan and buying a home is one of the most important things you need to prepare before starting your process.
Here are some of the things a loan applicant should do months before applying for a loan:
- Don’t make big purchases that may affect your credit history.
- Don’t allow any bank or financial institution check on your credit before you are ready to go ahead with a purchase.
- Pay all your debts on time.
Most lenders require the following documentation more or less:
- Recent paystub’s.
- An employment letter stating how long you have been working in your work place and your current salary – profit and loss statement specially in the cases of self-employed loan applicants.
- Personal balance statement.
- W-2 forms from the last two years.
- Personal tax returns from the last two years (all pages).
- At least two months back bank statements and investment statements.
- In case of a renter, 12 months of in time rental payments.
- Drivers license or other identification document.
- Current address and other contact information.
A good recommendation is to start your documentation process as soon as possible. This can speed up your financing process.
Another recommendation is to deliver al the paper work as complete as possible. Any page missing in a set of documents, any changes of a document, most probably will start a clarification process that may take long days and delay the whole process.
Always take good care of your credit history. Banks will check on it’s most recent changes, right before the closing date, and any extraordinary purchase or missed payment, any new credit card or closing of an account, may become into a terrible disappointment.
Going through the process of financing a home is nowadays a complex and time consuming process. Be prepared and follow it in a proactive way and you will succeed.