Securing a mortgage requires a laundry list of paperwork. But there’s a way to simplify it.
Every year for your tax returns, you gather together paperwork such as receipts, explanations, paystubs and W-2s. Seventy percent of this information contains the same things you’ll need for getting a mortgage loan. If you do your taxes on time in April and save your documents in a secure, easily accessible location, you can use it to to support your application for a home loan later in the year.
In an encrypted thumb drive, round up all your “mortgage documentation.” (Just remember the password for the thumb drive and, of course, where you ultimately choose to store it.) Within the drive, make subfolders that have the following titles:
- Tax returns: You can include all pages and schedules of personal returns and corporate returns. Mortgage tip: Make a PDF of this information for future use and store safely.
- W-2s: same concept, but you’ll need the most recent two years.
- Pay stubs: every time you get paid, download the pay-stub in PDF format onto the thumb drive and drag and drop it into the folder. It shouldn’t take too long and can save you a ton of time in the future.
- Bank statements: every month when you pay bills simply download your bank statements in PDF format and similarly add them into the appropriately titled folder.
Be sure to delete any sensitive information that is not properly protected on your computer to minimize your risk should you accidentally download malware onto your computer or otherwise get hacked.
Doing the above things does create a bit more work on an ongoing basis, but it insures you are prepared. These documents can also help your applications for other types of credit in the future, including:
- car loans
- student loans
- personal loans
- home equity lines of credit
- credit cards
- any credit offers
Documentation planning will make the process of obtaining credit less of a scramble, keeping supporting documentation literally at your thumb tips. Save yourself from the need to go “digging.” If applicable, also have this information handy:
- Your divorce decree: have the divorce decree including all pages, all schedules and the schedule of creditors in a saved folder.
- Prior foreclosure documents: have the trustee’s sale date deed.
- Short sale documents: have the final settlement statement from that transaction.
- Alimony or child support paperwork: have the agreement paperwork.
- Information on tax debt: have state and/or federal payment plan on file.
Requests for the documentation referenced in this article are consistent with today’s mortgage lending world. Be smart, be prepared and make sure you have the documentation ready before the lender asks for it to minimize hitting any snags.
Remember, too, your credit score will also play into your ability to qualify for an affordable mortgage. You can keep track of how your credit by viewing your free credit report summary, along with two free credit scores, updated every 14 days, on Credit.com.