The principle here is to look good on paper if you want to make it. That also means you can increase your eligibility for better interest rates.
There are three main areas considered for eligibility:
1. Documents for employment history
- Last two years federal tax returns and/or W-2 statements - verification for employment and earnings
- Pay stubs - most recent pay stubs, usually covering the past month. Pay stub must have your name, your social security number, your employer’s address, and your year-to-date earnings. These help determine if you will be able to handle your monthly mortgage payments.
- Employment history - it give an idea of the nature of your employment. A record of steady employment is a plus.
- Credit report that contains current creditors and account information - it represents how you have dealt with your past loans. This document must include the details (like minimum monthly payment and balances) of all credit cards, auto loans, student loans and child support payments. With this you are avoiding to pay higher interest rates that frequently accompany sub prime mortgages.
- Bank statements - three months of your most recent bank statements.
- Complete record of assets - include mutual funds, retirement accounts, real estate titles, and stock certificates. These can help you become a more worthy risk for the financial institution and secure a lower interest rate.
- Canceled rent checks - if you are renting, canceled checks that were used to pay rent can be proof that you are punctual with your payments. Some may ask for the name and address of your landlord instead of the canceled checks.
Describe the property you want to finance and the financial institution will help decide if any of the loan programs would be right for you.
That's it. Ready this documents when you go shopping for a new home and the mortgage application will go easy.
Source: Informa Research Services
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