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This chapter is from the book

This chapter is from the book

Accumulating All Your Financial Records

In most cases, especially if you don’t have any history with your lender, you need to accumulate two years of financial records. These records, coupled with your current credit report, tell the lender your average income over the past two years and verify that you have worked at the same location for that long. This information tells the lender that there’s a good chance you’ll continue working there and have reasonable expectations of promotions, raises, or at least cost of living adjustments (COLAs). All this information says that your income will, most likely, be stable.

Listing Your Credit Card Accounts

Having your credit card numbers handy simply helps with the process of completing the loan app. Your credit card accounts show up on your credit report, but having them available when you’re filling out your loan app is helpful.

Recording Your Other Account Numbers

It’s also helpful to bring your account numbers for checking, savings, and credit union accounts. Be sure to remember all accounts you have had within the past two years. Don’t try to hide anything. The lender you have selected wants to work with you, and he wants his commission on the loan. Any loan officer you authorize to process your loan has access to all your personal financial information, so be honest and let your lender work through any issues you might have.

Gathering Your Address and Work History

During the course of the loan app process, you’re asked to provide your current address and any other addresses you’ve had over the past five years. This information gives the lender an idea of your stability.

As I mentioned previously, you also need to provide information about your spouse (if any) and your employer. You and your spouse need to bring your two most recent pay stubs. Again, this information verifies the amount of your combined income and that you and your spouse are actually employed.

Other Documentation

You also need to bring copies of your federal income tax statements for the past two years, which verifies your income and helps establish what’s called your income-to-debt ratio—that is, how much you’re earning and how much you’re spending. This ratio helps determine how much you can pay each month in a combined mortgage payment (principal, interest, taxes, insurance, and HOA fees).

Before you go to your lender, you should be sure you have all the following documents to help speed your loan process:

  • Your past two years of federal income tax statements

  • Your last two pay stubs for both you and your spouse with company name and contact information

  • Your monthly HOA statement

  • Your last property tax statement

  • Existing mortgage statements (first and second if applicable)

  • Other debt statements

  • Your additional income statements, such as child support, trust fund, investment income, dividends, interest, and rental income

  • All your bank account numbers, including checking, savings, money markets, and so forth

  • Any other debt or income account numbers

To do list

  • Obtain your credit report.

  • Figure your FICO score.

  • Clean up your credit report.

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