Every buyer client of mine this year who has bought a home with a mortgage has complained how much information they have had to provide to their lender.
The process has become more tedious for homebuyers over the last 3 years. The silver lining is that homebuyers are getting getting home loans with incredibly low interest rates and most of my clients are getting fixed rate mortgages so they will have a low payment for as long as they own their home. Plus, clients are buying homes at very competitive prices.
Buyers have 2 misconceptions about getting a mortgage:
1) If they have a substantial down payment or if their credit score is high they will not need to provide as much documentation to the bank. and
2) if they are getting a mortgage with the same mortgage company they use for their banking they will not need to provide as much documentation.
Both of these are false – every buyer needs to provide plenty of documentation to get a mortgage.
Here is a list of documentation buyers need to be prepared to provide their lender:
- previous 2 years tax returns (not proof of filing an extension)
- documentation of their job which is more than simply a copy of a paystub. In some cases this is written confirmation of a job transfer and proof that the buyer’s first paycheck will arrive before the first mortgage payment is due.
- explanations of items on the bank statements the buyer provides the lender. The bank wants to have documentation on signing bonuses, transferring money into or out of accounts, any recurring charges that do not appear on the buyer’s credit report
- copies of all bank statements, not just 1 checking and 1 savings account
- signed separation agreement or documentation of divorce
- documentation for all income they state they make, including tips, history of bonuses, dividends, annuities, and business partnerships that provide income
- letters of explanation for any gaps in employment
The best training for the “paper marathon” is for homebuyers to keep their records accessible during the packing and move process. Lenders have been known to request a new piece of documentation just days before closing so having that box of paperwork available will help immensely.
Interest rates of 3.75% – 5.0% make it all worthwhile!
What do you think? Has this been your experience as well? You can comment below or send me an email to: email@example.com .