being prepared

For All Borrowers

• Copies of W-2s/1099s for the past two years
• Copies of the two most recent consecutive pay stubs showing year-to-date earnings
• Copies of your past two years’ tax returns

‍

Additional Documentation Sometimes Required

• Copies of checking and saving account statements for past two months (all pages)
• Copies of quarterly or semi-annual statements for checking, savings, IRAs, CDs, money market funds, stocks, 401k, profit sharing, etc.
• Copy of purchase agreement when ratified
• Employment history for the previous two years (address any gaps of employment)
• Residency history during the past two years
• Cancelled earnest money check when it clears or corresponding bank statement, if applicable
• Refinance copy of note, deed of trust, settlement statement, survey, and insurance information
• Any assets used for down payment, closing costs, and cash reserves must be documented by a paper trail
• If paid off mortgage in the past two years, need copies of HUD1 Settlement Statement
• Copy of driver’s license for applicant and co-applicant
• Copy of Social Security Card for each applicant and co-applicant.

‍

For Self-Employed Borrowers

• Copies of your past two years’ tax returns (with all schedules, including K-1’s if applicable)
• Copy of current profit and loss statement and balance sheet
• Copy of corporate/partnership tax returns for last two years if owning 25% or more of company plus copies of W-2s and/or 1099 forms
• Documents that may be required
• Relocation agreement if move is financed by employer (i.e. buyout agreement plus documentation outlining company-paid closing costs benefits)
• If you’ve had a previous bankruptcy, bring copies of petition for bankruptcy and discharge, including supporting schedules
• Divorce decree (if applicable)
• Documentation supporting monies received from Social Security/retirement trust income, i.e. copies of direct deposit bank statements, awards letter, or evidence income will continue.
• Documents needed for FHA/VA loans
• FHA: Copy of Social Security Card and driver’s license for each applicant and co-applicants
• VA: Original certificate of eligibility and copy of DD214 discharge paper
• VA: Name and address of nearest living relative

‍

OTHER CONSIDERATIONS

There are many other factors aside from financial considerations that go into deciding whether you are better off renting or owning a home. Would you like to be free to do what you please with the place in which you live—free from a landlord’s restrictions? If so, home ownership gives you that freedom. But are you prepared to carry the entire burden when it comes to home repairs? With homeownership, you pay for upkeep—not the landlord.

We know that purchasing a home can be daunting, but finding an expert partner in the home buying process is what will make it manageable and successful. The Lending Key offers you a high level of expertise and guarantees that you’ll be making the right decisions at every turn.

Buying a home can be extremely complicated, especially if it’s your first time. But if you’ve got the right information, you’ll be able to navigate this process successfully. Below are the top three mistakes that first-time homebuyers make, along with some good advice for avoiding home-buying pitfalls.

Mistake No. 1: Not Knowing Your Credit Score

Assuming you’ll be seeking a mortgage to pay for your home (as opposed to paying cash), your credit score is the most important first step in this process. Not knowing your score can have negative consequences.

The Fair Isaac Corporation Score or FICO® Score is the official name of your credit score. It varies from 300, which is very poor, to 850, which is excellent. It is calculated according to a series of risk factors: payment history (35% of score); amounts owed on your accounts (30% of score); length of your credit history (15% of score); new credit and inquiries (10% of score); and types of credit you have (10% of score).

The FICO Score gives the big picture of your credit risk. Lenders use it consistently to make credit decisions, such as the interest rate you’ll get on a loan. Don’t ever ignore this score if you’re trying to get a mortgage. If it turns out you’ve got a low score, you’ll pay more for your mortgage in the form of higher interest. Start by getting a copy of your credit report from the three leading reporting agencies: Experian, Equifax, and TransUnion.

Review your credit report closely, and search for errors. If you find mistakes, write out exactly what should be corrected and why. If you limit the amount you spend on a credit card to 30% of the maximum available credit, then you can improve your credit score. For instance, if the maximum available credit is $1,000, make about $300 in charges on the card to maintain a good credit standing.

‍

Mistake No. 2: Not Getting Prequalified For A Home Loan

The prequalification process for buying a home does not involve an in-depth analysis of your financial situation. It simply gives you an idea of how much home you can afford.

Why get prequalified? Because it will help you set realistic expectations. Knowing what you can afford will help you manage your own expectations and make appropriate choices based on facts, not fantasy. Why buy a “dream home” if it ends up becoming a nightmare because you can’t afford it?

Once you’re pre-qualified, you’ll have a specific dollar amount to use when you shop. That’s an advantage over homebuyers who are not prequalified when multiple offers are made on a home. Be prepared with a prequalification letter. Most home sellers consider offers with prequalification letters before those without.

‍

Mistake No. 3: Not Budgeting For Maintenance And Repairs

Many first-time homebuyers may underestimate the expenses that come with homeownership—something that can haunt them greatly down the road. You can bet on paying for maintenance and repairs more often than not. There will always be fairly minor expenses, such as lawn care, that are manageable. But there will be major costs, too, like a broken A/C that will require significant amounts of cash.

Additionally, in order to keep your home in good condition, there are all kinds of things you’ll need that are never required of renters. You’ll most likely need to buy a lawnmower, washing machine and dryer, dishwasher, refrigerator, hedge trimmer, soaker hoses, ladder, leaf blowers, and various tools. The list goes on and on!

Utilities usually also always cost more in a home. Consider the water bill alone, especially if you have a large lawn that requires consistent care.

In order to meet all these maintenance costs, it’s a good idea to start a maintenance fund of about 2% of the purchase price, so you’ll always know you can pay for repairs.