To qualify for a mortgage, you generally need to present lots of paper work to your lender. Some of the basic documents include your credit history and proof of income. Lenders need to examine your credit history to gauge whether you're worthy of risk. Although your FICO score is important to your lender's calculation, it's not the only piece of evidence underwriters consider when evaluating credit risk.
Lenders will take a look at any red flags or complaints in your credit report, creditor explanations, and so forth. Be aware that you'll have to hand over critical personal information, such as your social security number and your birthday, so take care to ensure the confidentiality of this info to avoid identity theft.
Lenders will also want to check out your recent income history to make sure that you're going to have enough funds to make good on your loan. You might have to compile W-2 forms, as well as verification that you are employed. The proof of income documents required can vary from lender to lender, and you may have to provide information for both you and your spouse if you're buying the house together.
In addition, if you have information about assets, such as 401k plans, mutual fund investments, and stocks, you can provide this data to the lender to support your claim that you are a worthy risk. Lenders want to know that you have lots of assets on hand to manage financial crisis.
A beefed up asset portfolio can help you qualify for lower rates -- even if you don't have an incredibly stable income history. (For instance, if you're a freelance writer and editor, you can get on the lender's good side by demonstrating a healthy asset portfolio.)
You have to include paperwork relevant to the purchase. Lenders will want to see homeowner's insurance paperwork as well as title insurance documents. You'll also have to supply what's known as an earnest money deposit document. Basically, this piece of paper demonstrates that you have deposited enough cash down to afford the house.
You may not be required to show this earnest money deposit, but you should be prepared. Have all your documents prepped and ready to go, so that the lender can process your application quickly. Delayed processing can potentially cost you on your interest rate, which can in turn translate into thousands of extra dollars you might have to pay in the future.
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