November 20, 2020
4 MINUTE READ
Curious about the documents needed to buy a home? If you’ve ever bought a home, you likely understand how stressful the process can be. From finding the perfect property and selling your current home to securing a mortgage, the process can be daunting, to say the least.
Once you’ve decided to enter the market, you can give yourself a head start — and potentially help minimize the last-minute scramble — by gathering the necessary documents ahead of time and having them ready.
Of course, the necessary documentation will vary depending on a number of factors, including the amount of your loan, your lender, and your income, among other things. Some of the documents that you may need when buying a home include:
Lenders need to see that you have a stable income that can support making your mortgage payments each month. Regardless of how often you are paid, plan on bringing in paperwork to show at least 30 days of income. If you don’t have paper copies or pay stubs, speak with your HR representative about obtaining digital copies.
While it may not be necessary, it can be helpful to have a letter from your current employer that contains your hire date and employment status. It can also be helpful to include your employer’s contact information for the past 2 years, including all company names and addresses, as well as the names and contact information for any former bosses or HR representatives.
It’s a good idea to have on hand at least two years of tax returns and W2s, which will help to support your income history. A long term tax and income history help to demonstrate your ability to pay back the mortgage over its lifespan, usually thirty years. Keep in mind that if your income has changed dramatically from year to year, you may be asked to provide further documentation or explanation.
If you are self-employed, or if you work as an independent contractor, your lender will also want to see tax returns, as well as current year to date profit and loss statements.
Part of your qualification to receive a mortgage loan includes information on your income to debt ratio — in other words, how your outstanding debt compares to the income you bring in. You already have your pay stubs to show your income… but how do you show your outstanding debt?
Gather all statements that you have, including car payments, student loans, and additional mortgages, as well as credit card debt. Also, make sure to bring up to date statements that reflect your most recent balances and totals due.
Bring proof of your residential history with home address or addresses for at least the last two years, complete with landlords’ names and contact information (if applicable). If you own another property, or if you have in the past, you will also want to provide substantial proof of ownership and/or sale.
You should also gather documents needed to buy a home that prove any additional income or assets, such as Social Security or disability payments, pension income, and bonuses or dividends. Also, bring along any documentation and statements for your investment portfolio, including stocks and bonds, as well as savings statements. Provide statements that show the value of your Certificate of Deposits, IRAs, 401(k)s, and more. Your total sum of assets counts toward your ability to purchase a home — so if you’re in doubt, provide documents.
Buying a home can be hard, but it doesn’t have to be. Being organized and thorough can go a long way toward helping ease the burden and anxiety of the home buying process. Of course, working with the right agent goes a long way, too.
Whether you’re just getting started or you’ve been through the home buying ringer, Reali’s got your back. Our buyers enjoy the Reali Rebate, a cash rebate that is passed back to you at the end of the sale. To date, Reali buyers have received an average of $12,000 in cashback.
All of our Reali agents are experts in the areas they serve — and they know how to help you in your house search. They’re here to support you through the entire process, from search to negotiations, throughout the paperwork process and closing. Any questions? Contact us today to learn more.