What’s the most important thing you can do in the planning stages of a new home loan? It really does not matter whether you might be contemplating buying a home with an FHA mortgage or building one on your own lot using an FHA Construction Loan known as the One-Time Close mortgage; there are some documents you will need to gather in the planning stages to help you get closer to loan approval.
Some of these documents are no surprise–your most recent pay information is a good example. Your lender will want to see verification of your current income.
What is not so obvious? The reality that your loan officer might ask you to provide details about a salary or other income information from your previous employer, especially if you have recently changed jobs.
Another thing you should try to anticipate? Most everyone knows that the lender is going to ask for other forms of verification of income; tax records are a good example.
But what about the small business owner? These loan applicants could be required to furnish three years of personal and business documentation including profit-and-loss statements, business plans, whatever the lender and state law may require in addition to the FHA Single-Family Loan rules in HUD 4000.1.
And where down payment gift funds are concerned?
Many know that if you get a down payment gift you and the gift giver are required to show that the funds did not come from non-collateralized loans or other prohibited sources.
But what’s not so well-known? You may be required to obtain a gift letter from your donor/gift giver that explains that the money is a genuine gift and that no repayment is required.
And not all the paperwork must come from the borrower or the borrower’s down payment helpers; the rules for contractors hired to perform FHA 203(k) Rehab Loan repair work or One-Time Close construction loan labor, the contractor must be able to show licensure and certifications are required by the state and/or your lender.
In the earliest stages of your home loan journey, among the most important pieces of documentation you will need is the most recent version of your credit report.
You don’t give this to the lender–the lender is not allowed to get your credit information from you directly but rather via the credit reporting agencies.
You will use this to help yourself–review for errors, outdated information, and possible evidence of identity theft.
Your journey toward loan approval and, ultimately, closing day, depend greatly on the contents of your credit report and if you don’t know what your credit scores are or what your credit report says, you aren’t truly ready to move forward with your home loan.