November 2019

Get All Your Docs in a Row

Get All Your Docs in a Row

You’re about to embark on taking out a Home Mortgage Loan; But, first things first, let’s be prepared! One of the best ways to prepare yourself is to have your Documents in-hand. But what Documents will you need? 

  1. Proof of Income

Income verification (which showcases your income history, your stream of income, and how much you make) is a necessity in obtaining a Mortgage. The following Documents are key in providing your Income information to Lenders:

If you earn an hourly wage or annual salary income:

  • Most recent pay stub
  • W2 statement for the past year
  • Most recent personal tax return

If you earn self-employment income, contract income, or revenue from a business you own:

  • 1099 statements for the past year
  • K-1 statements, if you own part of an S-Corporation or Partnership
  • Most recent 2 years of business tax returns, if you file and/or receive them
  • Most recent 2 years of personal tax returns
  • A year-to-date profit and loss statement, if an underwriter cannot verify your business’ income trend from tax returns

If you earn RSU (Restricted Stock Unit: compensation was given to an employee when they invested stock into a company) income:

  • Written Verification of Employment (WVOE) from your employer confirming RSU earnings from the previous 2 years
  • RSU agreement/vesting schedule for the next 3 years

If you earn rental income from investment properties:

  • Most recent yearly personal tax return
  • A signed lease agreement, especially if you did not claim rental income on your most recent tax return

If you’re on a  fixed income:

  • Award letters for pension, Social Security, and/or disability income
  • Bank statements reflecting the most recent benefits
  • Most recent personal tax return

If you receive child support/alimony payments:

  • A full copy of your divorce decree
  • Most recent personal tax return
  1. Debt-to-Income Ratio

Before handing out a Mortgage Loan, Mortgage Lenders will also want to get an idea of your current Debt situation. They’ll use the DTI equation to determine your DTI:

(Your monthly debt including your future mortgage payments) ÷ monthly income (money you earn before taxes) = Your DTI 

The lower your DTI, the better your chances are of getting the mortgage you want!

  1. Verifying your assets

Lenders will want to verify that you have the funds needed for closing, along with reserves if you happen to own additional real estate. In order to assure Mortgage Lenders, they’ll need to review the following:

  • At least 2 months of bank statements, including the full transaction history and current balances.
  • If there are any large or recurring payments or large deposits that fall out of typical use, we’ll need documentation for those transactions. For example, a large deposit into your checking account could be the result of liquidating funds from an investment account. In this case, statements from your investment account that line up with the deposit transaction would suffice. Or if you received a gift toward your down payment from a family member, we will need a letter confirming that it was truly a gift and not a loan.
  • If you are using funds from your retirement account, we’ll need the terms of withdrawal to confirm that you would be able to draw from the account without unexpected penalties.

Hopefully, we’ve helped better prepare you for the Refinancing road ahead! For a more streamlined Refinancing experience, click here.

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