Have These Items Ready When You Apply For a Loan

All lenders that I work with nowadays will have secure online portals where you can apply for a mortgage. In fact, if you're at that stage already, please let us know and we can recommend one of our stellar mortgage lender resources.

It used to be that lenders mailed out verifications to employers, banks, mortgage companies, and so on, in order to verify the data supplied by borrowers. "Okay, Boomer. Why are you telling me grandpa stories?" Well, verifications are still mailed out, but usually as part of quality control procedures. Potential homebuyers can get pre-qualified with a lender within minutes, although it can take hours or a few days to get to the pre-approval stage. Because most people apply for loans now online, alternate documentation has become more widely used. Alternate documentation means that underwriting answers can be obtained with information supplied directly from the borrower instead of waiting around for verifications to come back in the mail.

You'll still need to provide your lending institution with a not-so-short list of financial documents when you apply. To be prepared, a comprehensive list of required documents/items for most standardized loans as part of alternate documentation processing, is listed below. Items may differ according to whether your loan is a conforming (Fannie Mae or Freddie Mac), non-conforming (jumbo) loan, government loan, or a portfolio loan.

If it's been a while since you last applied for a home loan, you may be in for a surpise. While lending companies won't ask for your blood, or your first born, it can feel like that at times. This is a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, also known simply as Dodd-Frank. It is a comprehensive financial reform law passed by the United States Congress in 2010. The law was named after its two main sponsors, Senator Chris Dodd and Congressman Barney Frank.

Dodd-Frank was enacted in response to the financial crisis of 2008, which was triggered by the collapse of the housing market and the failure of several large financial institutions. The law aimed to prevent a similar crisis from happening in the future by increasing transparency, accountability, and oversight in the financial industry. So if it feels like the lender is asking for a lot of information, it's because they are. Now you know why. But it's a good thing. Dodd-Frank, for all of its shortcomings, helped to stabilize the mortgage lending industry. And for you, the more information you provide, the easier it is for the lender to know how well-qualified you are to buy that house.

So be prepared. Get these things ready to supply your lender in order to get a quick approval using alternate documentation:

Income Items

• W2 forms for the last two years
• Pay stubs covering a 30 day period
• Federal tax returns (1040s) for the last two years, if:
  • you are self-employed
  • earn more than 25% of your income from commissions or bonuses
  • own rental property
  • or are in a career where you are likely to take non-reimbursed business expenses
• Year-to-Date Profit and Loss Statement (for self employed)
• Corporate or partnership tax returns (if applicable)
• Pension Award letter (for retired individuals)
• Social Security Award letters (for those on Social Security)

Asset Items

• Bank statements for previous two months (sometimes three) on all accounts. All pages.
• Statements for two months on all stocks, mutual funds, bonds, etc.
• Copy of most recent 401K statement (or other retirement assets)
• Explanations for any large deposits and source of those funds
• Copy of HUD1 Settlement Statement on recent sales of homes
• Copy of Estimated HUD1 Settlement Statement if a previous home is for sale, but not yet closed
• Gift letter (if some of the funds come as a gift from a family member)
• Gifts can also require:
  • Verification of donor’s ability to make the gift (bank statement)
  • Copy of the check used to make the gift
  • Copy of the deposit receipt showing the funds deposited into bank account or escrow

Credit Items

• Landlord’s name, address, and phone number (for verification of rental)
• Explanations for any of the following items that may appear on your credit report:
  • Late payments
  • Credit inquiries in the last 90 days
  • Charge-offs
  • Collections
  • Judgments
  • Liens
• Copy of bankruptcy papers if you have filed bankruptcy within the last seven years

Other

• Copy of purchase agreement (if you have already made an offer)
• To document receipt of child support (if you desire to show it as income)
  • Copy of Divorce Settlement (to show the amount)
  • Copies of twelve months canceled checks to document actual receipt of fund

FHA Loans

• Copy of Social Security Card (or other documentation of social security number)
• Copy of Driver’s license

VA Loans

• Copy of DD214

If You're Refinancing

• Copy of Note on existing loan
• Copy of HUD1 Settlement Statement on existing loan
• Name, address, phone number, loan number of existing loan/lender