Stacks: Documents Required for Financing Your Home
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Your offer has been accepted! The hard decisions over, but the hard work is just beginning. Gathering and preparing the documents that are needed for financing is essential to getting to settlement on time. Preparation is particularly important for military families that will need extra documentation if seeking a VA loan.
Documents will fall into two categories:
1. Those you provide
2. Those you must review and sign.
Let’s start with the documents that you provide. Here is a list of probable documents that you will be asked to provide to confirm your eligibility for the loan.
1. Paystubs for the last 30 days
2. W-2’s for the last three years
3. Tax Returns for the last two years
4. Bank Statements for the last 3 months
5. Investment Statements for the last 3 months
6. Retirement Account Statements for the months
7. Copy of Driver’s License and Social Security Crd
8. Certificate of Eligibility DD214 for VA Loans
9. Divorce Settlement and/or Settlement Agreement
10. Current Landlord contact information/cancelled rent checks if you are currently renting
Additionally, your mortgage broker will ask for releases to review your finances. These releases could include:
1. Form 8821 Tax Information Authorization
2. and/or Form 4506 Request for a Copy of Tax Return
3. General Release of Authorization (This form, prepared by the mortgage broker permits the lender to review and verify your financial records.)
There is an additional stack of documents for you to review CAREFULLY!, and then to endorse with your signature. These will include:
1. Acknowledgement of the Receipt of Good Faith Estimate
This document is required for the lender to proceed with the processing of your loan. Most importantly, it is the legal notice that you understand the loan that you are applying to receive. This document must be reviewed carefully. Do not sign this document if you do not understand the terms of the loan or have concerns about what this loan will contract. Although you have not actually obligated yourself to the loan by signing the Acknowledgement, you are committing to processing the loan proposed in the form. The terms reflected on this document will be the terms you obligate yourself to at closing
The Good Faith Estimate is an estimate of the settlement charges and loan terms for the loan you are applying. It will reflect the date that your loan rate is locked to and the number of days your lock period includes A summary of the loan will be presented which includes the loan amount, rate, and term. There will be a series of questions which reflect whether your loan terms/payments can change because of the type of loan you are financing Read these answers closely to understand what might happen to your loan, particularly if you are applying for an Adjustable Rate Mortgage or balloon loan.
The Good Faith Estimate then includes the costs that you are required to cover at closing and any amounts that are required to be held in escrow.
The GFE must also include a Truth In Lending Statement that accurately reflects the terms of the loan and a good faith estimate of your monthly payment.
2. Additional Disclosures and Notices
There will be additional disclosures to sign acknowledging that you understand what your interest rate and discounts mean, the fee that your loan broker may be charging, and all fair housing and equal opportunity policies that must be adhered to in the process of the loan.
One particular disclosure is the Patriot Act – Information Disclosure. This document acknowledges that you have been informed that the government will collect and review some of the personal data on the loan in its fight to prevent the funding of terrorism.
3. The Uniform Residential Loan Application
This is the big one! What all of this financing talk is about! There are ten important sections on the URLA. Here is the low down on the form:
1. Type of Mortgage and Loan – check these for accuracies that reflect what you have acknowledged on the GFE.
2. Property Information and Purpose of Loan – This section not only includes the important legal description of the property, but what you intend to do with it. Do not be tempted to describe this property as a primary residence if you intend to rent it out. Lenders are quick to check out these details in the current mortgage climate. If you are building a home, this section is where the loan is denoted as a "construction loan."
3. Borrower Information – basic questions about who you are and your education
4. Employer Information – Stability! Lenders are definitely looking for someone that has stable and consistent income
5. Monthly income and Housing Expense Projections – This is the test! Can you afford this loan? Include all income that you incur each month, including any divorce of child support payments.
6. Assets and Liabilities – All you owe and everything you have saved and invested.
7. Details of Transaction - This section reflects much of the information from the GFE including closing costs and fees.
8. Declarations - Shine the bright line on your life in an interrogation room. These are direct questions that are alerts to lenders They include past foreclosures, judgments or defaults.
9. Acknowledgement and Receipt. – Sign. You are attesting that the above information is all true, so be notified that if you willingly falsified information you are perjuring yourself
10. Government Monitoring – optional information for the government to monitor who is getting loans.