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crucial step in starting your search for a new home is having
a clear idea of your financial situation. By getting a handle
on your income, expenses and debts, you'll have a much better
idea of what you can afford and how much you'll need to borrow.
For lenders to verify this information, though,
they're going to need to look at your financial records. It
is also important to remember that you should include records
for each person who will be an owner of the house. So before
you even visit the bank, make sure you'll be able to provide
copies of these important documents:
- Paycheck Stubs
Remember that lenders are most interested in your average
income. Not only will they want to see this month's paycheck,
but also how much you've been making for the past two
years. Steady employment is also more attractive to lenders,
so if you've been hopping from job to job, be prepared
to discuss the reasons why.
- Bank Statements
In order to qualify you for a loan, most lenders will
also ask you for copies of your bank statements. Ideally,
they'd like to see a steady history of savings--or at
the very least, that you're not bouncing checks every
month.
- Tax Records
It's always a good idea to save copies of your tax returns,
especially if you're self-employed. If you own your own
business, it's important to note that lenders generally
consider your income as the amount you paid taxes on--not
the gross income of the business.
- Dividends & Investments
Lenders will usually consider long-term investment dividends,
as well as your investment portfolio, when evaluating
your income.
- Alimony/Child Support
If you receive steady payments as part of a divorce settlement
or for child support, you can also include this as part
of your gross income. Just remember that lenders will
want to see a copy of your divorce/court settlement verifying
the amount of the payments.
- Credit Report
Virtually every lender will want to see a copy of your
credit report as part of the loan application process.
The report lists all of your long-term debts, as well
as your payment history. In general, they will require
you to pay for the credit report (approximately $50),
but if you have a recent copy, they may accept that instead.
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