Buying a New Home: The Documentation Edition

in Buying a Home, First Person: Our Blog, Mortgage

With many major housing markets across the country reporting a shortage of available homes, it’s a good idea to get pre-approved for a mortgage if you are planning to make an offer on a property soon. (First Internet Bank offers pre-approvals at no cost, and no obligation.) So what information and documentation is required to get the pre-approval process started?

Proof of consistent income

Lenders need to be sure that your paycheck is consistent and high enough to cover mortgage payments every month. That’s why the following documents are required to prove your financial stability:

  • Two most recent paystubs
  • Past two years’ W-2 statements
  • Federal tax returns from the past two years
  • Social Security or Disability awards letter (if applicable) from most recent year
  • Pension or Retirement awards letter (if applicable) from most recent year

If you are buying a home with your spouse or partner, the above documentation is required from both parties. In addition, if you or your other half are self-employed and file a Schedule E, additional paperwork is required. All business owners must provide K1 statements.

Proof of assets

You will also need statements from the past two months for your checking, savings, retirement and other investment accounts. This ensures you have the necessary money to cover the down payment and closing costs. It also tells the bank you won’t be wiped out and unable to make payments should an emergency arise.

Special considerations

If you are divorced, the bank will need to see a copy of your divorce decree and know how much you pay in alimony and/or child support.

When using your Veteran’s Affairs (VA) loan benefit, you’ll need to supply your lender with a certificate of eligibility. To learn more about VA loans, see our blog.

Ready to purchase?

Once you find the perfect house and have an accepted offer, if you decide to use the lender who pre-approved you for a loan, the additional documentation required is minimal. You’ll need to provide a clear copy of a government-issued ID such as your driver’s license, passport or passport card. Since the home appraisal is coordinated through your bank, you’ll also need to provide payment information (usually a credit card) to cover the cost of the appraisal. A handful of states (FL, NY, NM, OH, TX) also require a copy of the land survey be submitted to your lender.

Detailed paperwork from the actual purchase including your completed purchase agreement and all counter offers, as well as a copy of the cancelled earnest money check or proof of receipt will also be required. If this is your second mortgage for a vacation home, investment property or a home equity line of credit, your loan officer will inform you of any additional tax and insurance information that may be required.

Conclusion

We know it can seem overwhelming, but don’t let a few documents discourage you from getting into your new home. First Internet Bank is here to help! Call a First Internet Bank Loan Officer at 1-866-742-5158. We’ll be with you every step of the way and answer any questions you may have. Happy house hunting!