Applying for your first mortgage can be nerve-wracking as it determines how much a lender will offer as a mortgage and there’s no guarantee that will be sufficient to purchase a suitable property in your target neighborhood.
Your first goal must be to secure pre-approval. This is the conditional promise of a mortgage that allows you to make an offer or bid with confidence.
Your lender only issues the loan after an underwriter thoroughly assesses your application and has valued the property you intend to purchase as it will be held as collateral against the mortgage.
Some 20% of loans are now issued to buyers who use a mortgage broker. They help you identify the best loan product for your circumstances, and they’ll assist you with the application.
As a long-time local agent, I know how complex a loan application must appear to a first-time buyer. Having your paperwork organized in advance is the key to a stress-free experience.
Here are the essentials to start collecting in preparation for a mortgage application.
Work record
You’ll be required to provide employment information from the past two years. If you’re self-employed, you’ll need to show business records and tax returns.
Tax status
Lenders will request W-2 forms from the past two years. These show what taxes have been withheld by federal and state governments.
Current earnings
Show lenders your proof of earnings for at least the previous 30 days before you make the application. Many lenders want a minimum of two months.
Bank records
Provide information on all your bank accounts, as well as credit card debt and activity.
Debts – Declare any loan, such as those for student loans, a car, furniture or holidays. Be prepared to show the last three months of your credit card spending.
Outgoings
Estimate your day-to-day expenditure and use your credit and debit card statements to indicate spending habits. Show receipts for any rent you pay.
Dependents
State whether you are responsible for anyone else such as children or a spouse.