If you are finally ready to get into the market for a new home, there are new regulations that you should be aware of, whether you are a first-time or repeat buyer. If you are back on the market after buying a home in the past, know that the rules have changed significantly since you last applied for a mortgage. Gone are the days where mortgage applications relied solely on a credit check and it’s now necessary to have more information on-hand when you go to meet with your lender.
The Equifax Finance Blog has a great new article that talks about everything you need for each of your three home buying steps: prequalification, preapproval and putting in an offer on a home. You can learn more about the difference in the two in this helpful article from Investopedia.com. Prequalification is a snapshot of your debt, income and assets and personal information, and usually is a quick and free process. However, because it is only a cursory glimpse of your finances, there isn’t a lot of merit to them.
Approval or pre-approval of your loan is where the rubber meets the road of home buying, and is a much more in-depth process. You should have the following ready for your approval:
- Social Security numbers or individual taxpayer identification numbers for all borrowers
- Home addresses for at least the past two years
- Current names, account numbers, and balances of checking, savings, money market, retirement, and credit card accounts
- The address of your bank branch
- Checking and savings account statements for the past three months
- Your most recent pay stubs, W-2s, or other proof of employment and income verification
- Federal income tax returns for the past two years
- Evidence of any other income you receive (such as child support orders or Social Security award letters) if you wish to include this income for qualification
- Balance sheets and tax returns if you are self-employed
- Divorce settlement papers (if applicable)
- Canceled checks for rent or utility bill payments to show payment history
- Information on other consumer debts, such as credit cards, car loans, furniture loans, student loans and department store credit cards
- Gift letters, if you are using gifts from parents, relatives, or organizations to help cover the down payment or closing costs. Gift letters state that the money you received is a gift and will not have to be repaid.
While that may seem like a lot of paperwork and documentation, it all goes into getting you the most accurate approval amount and interest rate so you can best plan for your new home. See the full article to learn about what you need to have ready for your offer, as well as plenty of other home buying and personal finance advice on the Equifax Finance Blog.