Many people who are buying homes face several primary challenges.
One challenge is not having enough money saved for the down payment. Another challenge is not properly preparing for this event.
To properly prepare to buy a home, you should get your paperwork together, as you’ll need to submit lots of documents to the lender to get approved.
What documents do you need when buying homes, though? Here are seven vital documents you should have ready as you prepare to start the home-buying process.
1. Tax Returns
Choosing a house takes time, but you might not realize that applying for a home loan can take even longer. The process required for getting approved for a loan is strenuous and exhausting, and it requires proving many things.
One of the essential things to prove is your income, and you’ll need several documents for this purpose. The first thing you’ll need is to bring tax documents.
Your lender might request your tax returns from the previous two years. If you didn’t file them, you should do that now. You cannot get approved for a mortgage without them.
Tax documents prove many things, which is the reason your lender will ask for them. They show your job history, income, and job stability.
As you gather your documents, you might be able to stay more organized if you use software that converts a file from pdf to text. Using this software can help you keep these vital documents with you all the time, making it easier to work with lenders.
You can use the software for your tax forms and all the other documents you need to stay organized when buying a home.
2. Pay Stubs
Next, you should look for your recent pay stubs. Your lender will tell you how many you need, but you will probably need enough to show your income for the past two to three months.
If you get paid weekly, you might need the last eight to twelve stubs. If you get paid biweekly, you might need the last four to six stubs.
Recent pay stubs reveal your current earnings and your year-to-date earnings. They prove you have a job, and they confirm the amount of money you make. All lenders ask for these documents, so start looking for yours before you apply.
3. Letter from Your Employer
You shouldn’t be surprised if your lender asks for proof of employment. While your pay stubs prove that you have a job, many lenders want additional documentation that proves you have a job.
To get proof of employment, ask your employer for a letter. Your employer can create a letter that states that you work there, and it can also indicate the date you started working for this company.
4. Bank Statements
Another document you might need when buying a house is your bank statements. Some banks might not ask for these, but it’s a good idea to find them just in case.
Bank statements are incredibly important for people who run their own businesses and do not take regular paychecks. Their bank statements can show their deposits, balance, and much more, and lenders ask for these for this information.
If you’re self-employed, you might need additional documents as proof of income. You can ask your lender for a list of the materials they need from you if this is the case.
5. Savings Account and Investment Statements
Lenders typically want to know a person’s financial state before approving a loan, and one aspect the lender might ask for is your savings amounts.
How much money do you have in the bank? Your lender will want to know.
You can show the lender this information by providing the statements from all your savings and investment accounts. When locating these statements, try to find the most recent ones, as these are what your lender will want.
6. Debt Statements
It’s also common for lenders to ask for proof of debts. While your lender will likely view your credit report to see the amounts you owe, lenders realize that credit reports do not always contain this information.
You might owe money on debts that were not reported to the credit bureaus. It’s essential to show your lender all the debts you have, though, and you can do this by providing your debt statements.
If you owe money on a debt, look for your most recent statement. Gather these documents, convert the files, and store them on your phone or computer. This will make it easier for you to submit them to your lender when they ask for them.
7. Preapproval Letter
All the documents listed so far are necessary for getting a loan, but you will also need documents to begin looking at homes for sale.
The most crucial document you’ll need for this is a preapproval letter from your lender. Looking for homes requires this letter, as it proves that you are eligible for a home loan.
To get this letter, you’ll have to apply for a loan. To apply for a loan, you’ll need all the documents listed here.
It’s also important to know that your lender might ask for other paperwork, too. Submitting all the papers the lender asks for will help you get an answer for your loan a lot faster.
Proper Preparation Is Crucial When Buying Homes
Gathering up all the documents you need when buying homes might be a hassle if you’re not organized, but it is an essential part of the process.
By preparing for this event, you’ll have an increased chance of getting approved for a loan, which you probably need to buy a house.
If you’re interested in learning how to prepare for the home-buying process, check our website for more helpful, educational articles on this subject.