Mortgage Preparation Checklist

Here is a list of the decisions, information and documents you will need to have available for the mortgage loan application process.

Get Your Own Credit Scores:  Remember that multiple enquiries by lenders about your credit scores can severely reduce your credit ratings.  See our Reference Library article entitled, "Protect Your Credit" for instructions on how to get your own credit scores before applying for any loan.

Decide on the Mortgage Type that is Right for You:  See our article in the Reference Library entitled "Mortgage Choices" to learn the pros and cons of Fixed Rate Mortgages and Adjustable Rate Mortgages.  Information is power.  It will help you avoid many possible mistakes in the loan process and help you fend off the "sales hype" that works to the advantage of the lender, but could be costly to the borrower.

Decide Who the Major Borrower Will Be:  For married couples, or people in partner relationships where both names will be on the loan, decide who will be the "borrower" and who will be the "co-borrower".  Perhaps you are buying a vacation home with some friends.  Your loan approval chances improve if you make the "borrower" the partner who has the higher credit rating or the higher income or job security.

Ownership Types:  In most states, a married couple will have an owership type called "ownership by entireties", with automatic survivorship if one of the borrowers dies.  If purchasing property with a partner(s), where more than one person will apply for the mortgage loan, you need to consider "joint tenancy" or "tenancy in common", which have different rules regarding ownership rights upon the death of any of the borrowers or co-borrowners. 

Documents that will be required for borrower and co-borrower(s):

• Most recent Pay Stub
• Social Security Number and copies of Driver's Licences 
• Employment History:  Names and addresses for employer(s) for the last two years, dates of employment and income.  Explain any gaps in employment.
• W-2 Forms for past two years
• Federal Income Tax Returns:  Copies of income tax returns for the last two years
• Checking and Savings Accounts:  Institution names, addresses, account numbers, and current balances.  Copies of last three months statements will also be required.
• Investment Accounts:  Names and addresses of brokers or other investment holders, along with copies of statements for last three months.
• Retirement Accounts:  Names and addresses for brokers or 401K holders with current balances and copies of most current statements
• Life Insurance Policies:  Names of insurance companies, policy numbers, cash value and face value.
• Automobile Ownership:  Make, model and year of each vehicle owned, current market value, and evidence of title if owned free and clear.
• Other assets and income:  List and value of any other assets, like your current home and personal property, equity in investment property, business value if self-employed, etc.  List of other income such as alimony and child support, rental from investment property, trust accounts, social security if retired.  
• Credit Information:  Traditionally you need to list all of your creditors and provide copies of recent statements.  If you have gotten your own credit report, this will be self-evident, and you may submit a copy of your credit report, knowing that some additional documents may be requested.
• Current Debts and Expenses:  You will be asked for a list of all current debts and expenses.  This would include your current monthly payment and amount due on such things as car loans, current home mortgage (if applicable), tuition expenses for yourself or your children, childcare, investment property loans, etc.
• Copy of Final Offer and Acceptance with both the buyer's and seller's signatures 
• Property Information Listing Sheet or Multiple Listing Service Form which can be provided by your realtor.
• Copy of Earnest Deposit Check or Receipt
• VA Loans:  Copy of DD 214, original eleigibility certificate, most recent pay stub and childcare certification.
• FHA Loans:   Valid state driver's licence or photo ID, evidence of Social Security number and child care certification.

Real Estate Status:  If you own or owned a primary residence prior to applying for a mortgage, you will need to provide the following, based on specific status:

• Listed for Sale:  Copy of a listing agreement with realtor.
• Sold, but not Closed:  A copy of the final Offer and Acceptance, and sales contract.
• Sold and Closed:  If using proceeds for down payment, a copy of the HUD 1 Uniform Settlement Statement from closing will be required.
• Currently Rented:  A copy of the lease or rental agreement. 

Other Information that MAY be Required or Special Circumstances: 

• If Borrower is Self Employed:  Copies of last two years' and current year-to-date profit and loss statements and balance sheets, and copies of last two years' signed business tax returns with all schedules and W-2s.
• Divorced or Separated:  Copy of divorce decree or maintenance agreement with amendments, and a 12-month payment history of alimony/child support, if this income is to be taken into consideration on loan application.
• If Currently Renting:  Landlord's name and address and prevcious 12-month rental payment history via rent receipts or cancelled checks.
• Construction/Permanent Loan:  Signed construction contract with cost breakdown and builder's plans and specifications.
• Gifts:  If the down payment amount is a gift, a signed letter is needed from the donor to verify you are not required to repay the funds.  Often parents will provide this money, especially popular as a wedding present.
• Past Bankruptcy: Letter explaining reason for past bankrupcy, discharge papers and schedule of bankruptcy.  
• Recent College Graduate:  If less than two years in workplace, a copy of diploma or transcripts and written explanation of employment or unemployment history since gradutation. 

We hope that this Mortgage Preparation Checklist will help you be more informed and ready to comply with the loan application process.