Sep 17 2008
What You Need for a Mortgage Approval
Now that it has become more challenging for buyers to get loan approvals, it would be helpful to have an idea of what lenders look for in the financial status of buyers.
Although the criteria will vary from lender to lender, the following is becoming fairly standard when applying for a mortgage loan.
Here’s a brief summary of what you’ll need:
* Employment - Two years of verifiable employment.
* If you’re self-employed you’ll need the past two years of tax returns and year-to-date profit and loss statement certified by an accountant.
* If you’re using bonus, commission or overtime money to qualify, this money must be verified by your employer as a continuing source of income and must appear as income on your last two years of tax returns.
* Income tax returns - last 2-3 years.
* Alimony or Child Support - documented evidence if you’re receiving these payments and intend to use the money to help you qualify for a loan.
* Divorce - if you’ve been divorced, you need to verify that you are not paying alimony or child support.
* Rental income - if you own rental property, you’ll need copies of all leases and income statements for the past two years. Lender may require that you have at least 30% equity in the property.
* Full explanations for any large deposits into your bank accounts within the last 3 months.
* Closing costs - you’ll need proof that you have the money to cover closing costs. Cash-on-hand will probably not be considered an acceptable source.
* Gift money - if you’re getting some money to help you pay closing costs you’ll need to fill out a form, signed by both you and the donor and a verification that the donor has sufficient funds to cover the gift and that the funds have been deposted into your account.
* If any money to close is coming from the sale of another property, you’ll need a copy of the signed sales agreement for that property and a copy of the HUD-1 (statement of closing costs) from that sale.
Again, requirements may vary from lender to lender - and there may be other documentation you’ll need aside from what I’ve stated above.
Despite the current problems in the economy and the housing market, if your credit is solid and you can provide documentation for just about anything, your chances for a loan approval are still excellent.
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