What paperwork is needed for a Mortgage Loan Pre-Approval in Kentucky?


What Paperwork Will I Need?

Minimum Documentation List

  • Last 30 days pay stubs for all borrowers
  • Last 2 years w2 statement for all borrowers
  • Last 2 years tax returns, all schedules
  • Minimum: Verbal of source cash to close will come from (assets, gift, equity)

Additional Documentation – Verbal of balances ok to start

  • Last 60 days bank statements covering funds to close
  • 401k documentation if taking out loan against retirement

Complete Documentation List for Most – Will eventually be needed

  • Borrower’s Authorization form
  • Current Driver’s License for all borrowers
  • Social Security Card for all borrowers
  • 4506T Form signed – Authorization to order tax transcripts for income verification

Self Employed, Bankruptcy, Foreclosure, Short Sale or Deed in Lieu in Past

If you are self employed, or suffered a financial hardship in the past, expect that additional documentation will be asked for.

Self Employed

  • Evidence of 2 years as business entity (business license)
  • Last 2 years business tax returns or Schedule C – if applicable

Financial Hardship

  • Bankruptcy petition – if applicable
  • Bankruptcy discharge – if applicable
  • Bankruptcy notice to creditors – if applicable
  • Final HUD from short sale – if applicable
  • Deed in Lieu agreement – if applicable
  • Addresses of homes included in BK – subsequent foreclosure, short sale or DIL

 

Your employment history is another major factor when it comes to your mortgage application. In general, most lenders want to see at least two years of consistent of employment history at the time you apply for your mortgage.

Requirements may differ depending on whether you are paid a salary versus hourly wages, work part-time versus full-time, and whether you are employed or self-employed. Note, too, that different lenders may handle income from things like a second job and overtime differently; these sources of income may not always be allowed to count toward your overall income on your mortgage application. Given these variables, you should be sure to tell potential lenders the details of your employment situation at the outset to make sure you don’t hit any unforeseen bumps in the road.

If, after approaching a handful of lenders, you find that your employment history is a little too spotty, now may be the time to focus on remaining consistently employed for a year or two before applying for a mortgage.

Get a pre-approval

Mortgage pre-approvals aren’t ironclad, but they are a solid indicator of an eventual approval so long as nothing major changes between pre-approval and final mortgage application. “I have seen people that have wanted to switch jobs or make major financial decisions in the middle of their application process,” says CORE New York real estate broker John Harrison. “Don’t do it. Every type of approval down to the final loan commitment is still usually contingent on something. If you change the scenario, you may pull the plug on the whole deal.”

KENTUCKY VA REFINANCE LOAN

Joel Lobb
Mortgage Loan Officer
Individual NMLS ID #57916
 
American Mortgage Solutions, Inc.
 

Text/call:      502-905-3708

fax:            502-327-9119
email:
          kentuckyloan@gmail.com
 
 

 

 

The Biggest Mistake Consumers Make When Taking Out a Home Loan


The Biggest Mistake Consumers Make When Taking Out a Home

 

Loan.

 

Bank Statements Don’t Reveal the Whole Picture

Bank statements show the funds in your account, but whether these funds are legitimate is another question indeed. And cash deposits that are inconsistent with your banking history will be under the lender’s magnifying glass. In fact, cash deposits cause more problems and scrutiny for consumers trying to secure mortgages credit today than any other credit item.  So let’s take a look at the typical scenarios homebuyers need to be ready for when documenting their cash in the bank.

If any deposit is more than 25% of your monthly income…

Then monies will have to be sourced with a clear letter of explanation, or a potential gift letter if the money came in the form of a gift, along with a statement from the person gifting that money showing they had the ability to do so.

If any deposits are less than 25% of your monthly income…

Then these funds can be used in the loan transaction, although the consumer may be asked to explain where the funds originated. However, no paper trailing will be required.

If cash is from a side job or any other exterior source other than your occupation…

Then — if it is needed for the mortgage transaction — that money will have to be “seasoned” for a period of 60 days, meaning those funds are ineligible for use toward the mortgage until two statement cycles have passed.  Then those funds will be eligible.

If a deposit is a gift…

Then the person giving the gift needs to show on paper a clear ability for them to gift money to the recipient. In other words, a friend of the person giving the gift can’t make a deposit in the giftor’s account without getting a clear and concise explanation including a gift letter and subsequent paper trail with bank statements showing where the funds originated and where the funds ended up.

If additional reserves are needed, e.g. two months’ worth of mortgage payments liquid in the bank (which is typically what’s needed)…

Then consumer must meet the 60-day seasoning requirement, unless the funds are from paychecks in the normal course of pay periods.