Expect document overload when you buy your next home
Have you received and accepted an offer on your home and are now entering into contract for your next residence? The following is a non-exhaustive, short list of the documents you should have ready prior to your scheduled appointment with the mortgage company.
Admittedly, finding and sorting through all of the following documents is taxing, but being prepared will go a long way to completing your transaction in an expedited manner. Ultimately, consult with your real estate agent and/or mortgage broker to obtain the latest list of required home buying documents in your county.
Year-end statements
Make sure to find and organize all of your W2 and/or 1099 income statements. As a general rule, have two years worth of hard copy documents on hand. If you are unable to find these individual documents easily, print copies of your tax statements from the last two years.
Recent paystubs
In most cases, the last two paystubs will suffice. If you have direct deposit paychecks, you may or may not have easy access to hard copies. If not, print pdfs from your bank deposit statements. In rare cases, your lender may ask for a more extensive pay history. If you do not have everything requested in hand, simply make a list and set up a return appointment.
Checking, savings and other accounts
Make sure to include all recent bank statements in your growing financial documentation portfolio. Several recent months should be enough to prove you have honestly filled out the credit and loan applications. However, be prepared to provide whatever time frame of statements is requested.
Is your “rich uncle” helping you out?
If you are getting a little – or a lot – of help from a family member or relative, be sure to have an official letter verifying the fact that the money is indeed a gift, not a loan. Make sure the letter addressed to the mortgage company includes the amount of the gift, the address of the property you are entering into contract to purchase, as well as the date the funds transfer was completed.
Debt statements
Make sure to have hard copies of any credit card, student loan, and car loan statements in hand. Also, if applicable find supporting documents for child support agreements and payments and any other legal obligations. As is always the case when dealing with financial transactions, honesty is the best policy. Do not forget to include any “embarrassing” obligations that the lender will find out about later.
A clean copy of your driver’s license
Of course do not forget to make a copy of the drivers’ licenses for all parties involved in the purchase. These are your certified identification cards in the state of California. Most likely, you will need to show drivers’ licenses on more than one occasion throughout the buying transaction.
Proof of insurance coverage
Before closing, the mortgage company will require you to show proof of insurance on the property you are buying. This is not to be taken lightly. Remember, you are asking for sizeable loan (in the vast majority of cases) and will need to prove without a doubt that the financial institutions liability is covered for catastrophic loss. Depending on where the property is located, the lender may require proof of home insurance which includes special hazard and/or flood insurance. Ultimately, it is best to have printed copies of the policy or policies in hand.