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Mortgage
Glossary | All About Adjustable Rate
Mortgages | Getting Your
Finances in Order
Your Credit History | When
Should You Pay Points on a Loan? | Saving
for the Down Payment
Closing Costs
A crucial step in starting
your search for a new home is having a clear idea of your
financial situation. By getting a handle on your income, expenses
and debts, you'll have a much better idea of what you can
afford and how much you'll need to borrow.
For lenders to verify
this information, though, they're going to need to look at
your financial records. It is also important to remember that
you should include records for each person who will be an
owner of the house. So before you even visit the bank, make
sure you'll be able to provide copies of these important documents:
- Paycheck Stubs
Remember that lenders are most interested in your average
income. Not only will they want to see this month's paycheck,
but also how much you've been making for the past two years.
Steady employment is also more attractive to lenders, so
if you've been hopping from job to job, be prepared to discuss
the reasons why.
- Bank Statements
In order to qualify you for a loan, most lenders will also
ask you for copies of your bank statements. Ideally, they'd
like to see a steady history of savings--or at the very
least, that you're not bouncing checks every month.
- Tax Records
It's always a good idea to save copies of your tax returns,
especially if you're self-employed. If you own your own
business, it's important to note that lenders generally
consider your income as the amount you paid taxes on--not
the gross income of the business.
- Dividends & Investments
Lenders will usually consider long-term investment dividends,
as well as your investment portfolio, when evaluating your
income.
- Alimony/Child Support
If you receive steady payments as part of a divorce settlement
or for child support, you can also include this as part
of your gross income. Just remember that lenders will want
to see a copy of your divorce/court settlement verifying
the amount of the payments.
- Credit Report
Virtually every lender will want to see a copy of your credit
report as part of the loan application process. The report
lists all of your long-term debts, as well as your payment
history. In general, they will require you to pay for the
credit report (approximately $50), but if you have a recent
copy, they may accept that instead.
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