When faced with two choices, we often make our decision based on which option offers the path of least resistance. If you are getting pre-approved for a mortgage, the path of least resistance may be a red flag instead. Make sure you are providing your mortgage professional with your pay stubs, tax returns and bank statements so you're pre-approval is accurate. Providing this documentation upfront will also make the process move along more quickly when your purchase offer is finally accepted.
Here's a full list of documentation that mortgage lenders would like you to provide in the very beginning to make sure your pre-approval is the most accurate it can be:
Copy of your Driver's License - Your license should have your current address on it as well
Last 30 days worth of pay stubs with year-to-date income clearly indicated
Last two year's of W2s
Last two year's of personal and/or business taxes returns, all pages, all schedules - This is probably the most crucial component when it comes to figuring out a borrower's income. To get the most accurate pre-approval, it is important to provide this information to your mortgage loan officer.
Last two month's bank statements/retirement statements, all pages, even if blank - Lenders will need to verify your assets to ensure you have funds available for down payment, closing costs and other pre-paid items.
Once you're pre-approved, you've made an offer and it's been accepted, you'll be asked to provide recent copies of pay stubs or bank statements if your pre-approval was issued weeks or months prior to your offer being accepted. You will also receive a set of loan disclosures once you have agreed to move forward with a lender, and you may be asked to provide other documentation, such as:
Letters of Explanation - These can be for addresses if you have moved frequently in the last two years, have gaps in employment, credit items that need explaining, or large deposits (other than payroll) that appear on your bank statement.
Proof of tax payments - If you owed money to the IRS on your previous year's tax return, you will need to provide proof that it has been paid, or that you have payment arrangements.
Earnest Money Deposit - Proof of the funds that you put down when you sign the purchase contract will need to be provided to the lender (copies of checks, wire transfers and the bank statement showing the items clearing).
Homeowner's and/or Flood Insurance - Closer to closing, you will be asked to provide proof of your homeowner's and/or flood insurance. A good time to start shopping for insurance is once your appraisal is back.
There may be other items requested, as each loan scenario, and borrower, is unique. The requests for documents may seem tedious as times, but by providing everything requested in a timely, efficient manner, you will help move your loan application through to closing, and be well on your way to homeownership and the house of your dreams.