OK, so you have decided to take the plunge and own a new home. You have braced yourself for the ordeal of digging through files to find your tax returns from the past two year, pay stubs and auto loan history. This shouldn't be real bad, right?
And then it starts...
You need bank statements - complete bank statements. Meaning that the last page full of boilerplate language that you always throw away suddenly becomes important. What's going on?
Your lender is now liable - both as a company and personally - to make sure that you don't default on this loan, because if you do, then you can sue them! So here are the items that they have to document to make sure that they can justify their decisions in court:
·
Your current or reasonably expected income or assets, excluding the value of your current house (if you have one)
· Your current employment status;
·
Your monthly payment for the new mortgage;
· Your monthly payment for any other loan or HELOC (Home Equity Line Of Credit)
·
Your monthly payment for mortgage-related obligations (such as property
taxes and certain insurance premiums);
·
Your current debt obligations, alimony and child support;
·
Your monthly debt-to-income (DTI) ratio or residual income; and
·
Your credit
history.
The last one is the kicker! The first 7 items have to do with what you are currently paying out, and what you are taking in as income - which makes sense. It is the HISTORY that is the problem.
Your HISTORY on each item also has to be detailed. It isn't enough to have a great-paying job. How long have you had it? What did you do before that? How secure is it?
It isn't enough to have no late payments on your mortgage - have you ever had a late payment? When was it? Why did it happen?
The NICE part about this, is YOU DON'T HAVE TO BE PERFECT - YOU JUST HAVE TO HAVE AN EXPLANATION.
Next Up - What it take to document these things!
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