Documents Required Before Purchasing a Home

Here’s a handy checklist to help you collect the documentation you will need to qualify for a mortgage and purchase a property.

What you will discover:

What documentation do I need to purchase a house?
What tax documents should I collect?
What financial papers must I provide to the lender in order to purchase a home?
What real estate or residential history paperwork am I need to provide?

Mortgage rates are at an all-time low, prompting many individuals to consider purchasing a house in the next year. Anyone considering entering the real estate market should organize their financial affairs beforehand. If you have previously completed the Home Purchase Worksheet and determined that purchasing a home makes financial sense for you and your family, the next step might be to assemble the documentation required to apply for a mortgage.

The quantity of papers you may need may seem daunting, but if you arrange your effort around sorts of documents, such as employment, tax, real estate, assets, and debts, you will get through it without losing your mind. Here’s a tutorial to help you get started.

What documentation do I need to purchase a house?

Before you can acquire a mortgage to purchase a house, your lender will want to establish that you have consistent work. This may be accomplished by submitting pay stubs and W2s. However, some lenders may want your hiring date and job status. This information may be included in a letter from your present job. When you apply for your loan, you may be required to supply your employer’s contact information, including the firm name, address, and phone number of the HR representative.

What tax documents should I collect?

W2s are considered part of your tax records, and most mortgage lenders need them. If you are self-employed or receive money from a non-traditional source, purchasing a property may be more difficult. Most lenders will want two years of tax papers to demonstrate that your company or self-employment is legitimate and lucrative. Lenders depend on this information to determine if you are gainfully employed and able to pay your mortgage.

If your work or income has suddenly changed, you may be required to file extra years of tax returns. You may call your lender and explain the circumstance, after which you can evaluate if further tax documents is required. This is also a good time to hire a real estate lawyer to make sure all of your paperwork is in order.

What financial papers must I provide to the lender in order to purchase a home?

The lender will assess your debt-to-income ratio and general credit history using your credit score. If you have outstanding loans, you may be required to provide proof in the form of statements with account balances. If possible, compile the names, addresses, account numbers, monthly payment amounts, and outstanding balances of each account into one document so that your lender may evaluate the information all in one location.

Lenders also want to examine asset information. This begins with your bank statements and covers transactions spanning 30 to 60 days. Year-to-date profit and loss statements are useful if you own a firm.

Your total net worth includes all of your assets. Bring statements for any IRAs, stocks, bonds, CDs, or other instruments you own. If you have enough money for a down payment, show it on your bank statement. Any extra income, such as disability benefits or dividends, must also be included in your financial information package.

What real estate or residential history paperwork am I need to provide?

Make a note of your home addresses as well as your landlords’ names and contact information if you have rented in the last two years. If you are a homeowner, you must provide evidence of ownership or proof of sale. You must submit evidence of ownership if you possess non-residential property that is considered an asset.