Okay, so, let say that you’ve prepared your financial statement and you bring it and your credit report with you into the office of a home loan officer. Keep in mind, they do want your business, however, in today’s economy, they’ve tightened down on several things (unless you go to a non-nationally linked bank.) Perhaps you’ve had an account with this bank for several years, but you have only dealt with the tellers and the person who opened your account. You’ve never had the need for anything from a loan officer, they might need a bit more. The things that you will also need to be prepared to provide are:
1. The signed purchase agreement.
2. Copies of your W-2 forms.
3. Proof of income (original pay stubs, verification of employment, or two years’ worth of tax returns)
4. Proof of assets (bank statements, investment statements, etc.) to show you have money to cover closing costs
5. Copy of the earnest money deposit
6. Copy of your homeowners insurance.
Wait…homeowners insurance? But I don’t own the home yet? Don’t panic, this is not always required by all banks, however, a good faith quote could work in place of an actual policy. In the event that you do require Proof of Homeowners Insurance, then you talk with an insurance agent and tell them you need to policy, but ask if you can get a refund in the event that your loan application is denied.
The more financial documentation you provide to the loan officer, the smoother the process will go, and the more the bank will consider because they don’t feel you’re trying to hide anything from them. If they DO deny your application, sit down with the loan officer (in a non-threatening manner) and ask him what were the points that you were declined for: Credit rating, debt-to-income ratio, or too large an amount for their lending requirements. If it’s the latter, GREAT! Because then you can try to figure out a way to further negotiate with the seller. Stick with me and I’ll show you some great financing tricks.
As always, remember the worst that anyone will ever tell you is, “NO.”
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