Mortgages/Loans & the Documents you will need

Long Beach Homes for Sale Present: Mortgage & Loan Document tips

Applying for a loan can be overwhelming.

Your chances for being approved for a loan in Long Beach have recently increased. For the fourth straight quarter, fewer than 6% of banks tightened mortgage guidelines and roughly 10% of banks actually loosened them. This may suggest to us there is a quicker, simpler mortgage approval process but nowadays lenders require paperwork that documents every facet of your financial life. The team at Long Beach Homes for Sale understand the confusion that can be common for borrowers who are attempting to apply for a mortgage. Below is our compiled list of necessary documents needed for your loan request experience.

Personal identification documents: To verify your identity, banks often require photocopies of both sides of your drivers license and/or U.S. passport, and may also ask for copies of your social security card.

Credit Report: It's common knowledge that your credit report will be checked when applying for a loan. In addition, if your credit report lists collection items, judgments, or federal tax liens, be prepared to discuss these items with your lender. Sometimes, a derogatory credit event can be eliminated or ignored if it is explained properly. 

You need documents such as W-2 Forms and Pay Stubs.

W-2s, and pay stubs: Loan guidelines typically specify one month of verified income but lenders can request to see up to two years of documentation.  You can prove this with paycheck stubs. Employees paid electronically should call their employer and ask for printouts. Guidelines also typically require your most recent W-2 Form. Self-employed applicants may be asked for additional business information such as a current-year profit-and-loss statement. Borrowers earning income via Social Security, Disability Income, Pension or other means should expect to provide documentation.

Bank Statements and Tax Returns: Borrowers generally must supply bank statements for the last 30-60 days.  Be prepared to explain unorthodox deposits that might bring suspicions of money laundering. Tax returns are scrutinized for reimbursed employee business expenses, self-employment business losses and other signs of loan fraud, such as reported income that doesn't match an employee's W-2. In the past, only self-employed borrowers were required to present income tax returns. Today, almost everyone is expected to provide a recent tax return.

Provide documents if you plan to rent your residence

Rental property income: Borrowers who include rents from investment property in their income need to show the income on their tax return. Ricardo the Realtor and his team would like to specifically point out to homeowners planning to buy a new home and rent out their current residence that you must provide a rental agreement, canceled rent checks and bank statements. You also must have at least 30 percent equity in their current residence.

Gift letter, paper trail: Borrowers who receive a cash gift toward their down payment should be prepared to provide a letter from the "giftor" that declares the gift isn't a loan. A copy of the giftor's bank account statement showing the funds, a canceled check and the borrower's own statement showing the funds also may be required.

Other documents, letters: Renters must supply 12 months of canceled rent checks and bank statements showing the rent was paid on time. Renters without that documentation can provide the landlord's name and contact information for payment verification. Borrowers also may be required to provide a copy of a divorce decree, proof of a child's age if child support is counted as income, bankruptcy discharge papers and more. Lenders also may demand letters that explain negative items on a credit report or verify the borrower's motivation for the loan.

Altered documents are invalid

A Few Loan tips:
Bring in documents early. Never cross out, white-out or alter any information or the document is invalid. Even if a document is blank, you should still include it. Documents expire after 60 days so if your house-hunting efforts take longer, expect to have to supply updated information such as a current paycheck.

The more information that you share with your lender, the smoother your mortgage approval process can be. The guidelines are much stricter than they used to be. As the housing market improves and lender confidence increases, mortgage guidelines are expected to loosen up. 2013 may open lending to even more mortgage applicants. Ricardo The Realtor and his team at Long Beach Homes for Sale are here to help. Give us a call and we can give you sound advice or direct to to a Loan professional that can help. 562.533.4003