Documents you will need to gather if you are buying or refinancing a home
- If you are salaried then gather the last 30 days worth of your most recent pay stubs showing your year-to-date income, or pay stubs from other employers if you've had more than one in this year plus W-2 Forms for the past 2 years
- If you are mostly a commission, bonus or tip earner then gather your most recent pay stub showing year-to-date income & last 2 years of your tax returns with 1099 Forms
- If Self Employed then gather 2 years tax returns plus 2 years of any 1099s you've received
- Gather your most recent 2 months bank statement for all checking and savings accounts, including IRA/401K, stocks, bonds, CD's, Money Market, etc.
- If you own rental property, please provide rental agreements and two years tax returns
- If Re-financing, obtain your note on your mortgage(s). This will normally be found in the settlement paperwork from the close of your loan. Or a most recent mortgage statement
- Gather your most current mortgage coupon and homeowners Insurance Agent Information
- You may be asked to provide a copy of divorce decree if applicable
- If you are NOT a US citizen, provide us with a copy of your green card (front & back) or, if you are NOT a permanent resident provide us with your H-1 or L-1 Visa.
Getting pre-approved before you shop for a home can help you & the real estate professional know how much you can borrow. It also prepares you for how much of a house payment to expect and how to stay within your means. This will help you:
- Find out the maximum house you can buy, so you don't waste time looking for properties you cannot afford
- Puts you in a stronger position when you are negotiating with the seller because the seller knows that your loan is already pre-approved
- Helps the loan process flow much smoother & the loan close faster since most of the work gathering documents was done up front.
Shop Loan Programs and Rates
To shop for a loan you will need to:
- Determine how long you will remain in the home. If you plan to sell the house in a few years you may want to consider an adjustable rate mortgage. Generally adjustable rate mortgages have a lower interest rate, thereby making the payment lower. This would increase how much money you have left over every month. On the other hand, if you plan to stay in the house for a longer period of time, then you may want to look at fixed rate mortgages.
- Understand the relationship between rates and points. Points are considered to be prepaid interest and are tax deductible. Each point is equal to one percent of the loan. So for example 1 point on a $100,000 loan is $1,000. The more points you pay, the lower the rate you will get. Remember that paying points will increase your closing costs & the amount of money you'll have to come in with at the close of escrow.
- Compare different loan programs. Shopping for a loan can be tedious. With so many programs to choose from, each of which has different rates, points and fees, it's hard to figure out which program is best for you. That's where using your trusted loan advisor will be your biggest asset.
Obtain Loan Approval
Once your loan application has been received we will start the loan approval process immediately. This involves verifying:
- Your Credit history
- Your Employment history
- Your Assets including your bank accounts, stocks, mutual fund and retirement accounts
- The Value of the Subject Property
Based on your specific situation, additional documents or verifications may be required. To improve your chances of getting a loan approval:
- Answer all questions on the loan application as completely as you can
- Respond promptly to any requests from your loan officer for additional documents. This is especially critical if your rate is locked or if you plan to close by a certain date
- Do not make any major purchases. Do not buy a car, furniture or another house until your loan is closed. Anything that causes your debts to increase might give a lender enough reason to deny your current application
- Do not move money into your bank accounts unless it can be traced. If you are receiving money from friends, family or other relatives, please contact me
- Do not go out of town around the closing date. If you must be out of town when your loan is anticipated to close, you may sign a special power of attorney to authorize another individual to sign on your behalf
- Do not allow any other institutions to pull your credit report. Doing so may decrease your credit score which can change the program and rate you qualify for
Close the Loan
After your loan is approved, you will be required to sign the final loan documents. This will normally take place in front of a notary public. Be prepared to:
- Set up a wire from your bank account to the title company for your down payment and closing costs if required. Some times a cashiers check can be used, but ask your title company or loan officer first. Personal checks are not accepted.
- Review the final loan documents with your loan officer present. Make sure that the interest rate and loan terms are what you were promised. Also, verify that the name and address on the loan documents are accurate
- Sign the loan documents
Your loan will normally close shortly after you have signed the loan documents. On refinance transactions federal law requires that you have 3 days to review the documents before your loan transaction can close. They call this period of time the right of rescission.