By Rebecca McClay
Amid the euphoria of envisioning your new home comes the sobering reality of shopping for a mortgage. It’s time-consuming, it’s complex, and it’s a little daunting. But if you’re armed with the right questions and come to the table with the right documents, shopping for the right loan becomes an easier process.
Comparing rates and fees and seeing where you can negotiate closing costs can save you thousands of dollars, so putting extra effort into preparing for lender meetings can pay off.
To help streamline the process, this one-stop reference guide suggests the important documents you should bring to each appointment with a lender; you’ll also find a list of key questions you simply must ask to get the best information for cost-comparing loans.
Key documents for lender appointments: Using this list of key documents, gather all the materials into one folder so that you’re never scrambling to find the right paperwork.
o. Copy of your driver’s license or passport.
o. Proof of regular rental or housing payments.
o. Copies of your two most recent paycheck stubs.
o. Copies of your W-2s from the past two years.
o. Copies of your federal tax returns with all schedules for the past two years.
For self-employed income:
o. A statement of year-to-date profit-and-loss for the business.
o. Copy of any corporate tax returns.
o. Copy of all current IRA statements, stock and bond accounts, or any other retirement or investment accounts.
o. Copy of current bank statements for each account for the past 60 days.
o. Documents on the value of personal property like automobiles.
o. Forms showing the face amount and value of life insurance policies.
o. Copy of any lease agreement for a rental property.
o. Copy of any student loan deferment letter or agreement.
Additional documents you may need:
o. If you are divorced, a copy of the final divorce decree.
o. If you have filed for bankruptcy, the complete bankruptcy paperwork.
o. If you are an active veteran, a statement of service and an authorization to live off base.
Key questions for comparison shopping: Print out the following list and keep it on-hand as you start shopping for your home loan. Meeting with loan officers can be overwhelming — this way you won’t forget to ask important questions.
o. Is the mortgage fixed or variable?
o. If the loan is fixed, what is the interest rate or annual percentage rate (APR) of the loan?
o. If the loan is variable, when does the rate change? And how is the rate change determined?
o. How long are quoted interest rates good for?
o. Is the Good Faith Estimate guaranteed?
o. What are the escrow requirements for taxes and insurance?
o. Is there a penalty for paying off the loan early?
o. Do you allow extra principal payments?
o. How long do funds, say for a down payment, need to be in my bank account before closing?
o. What are all the closing costs? Will you provide a written list?
o. Are any of the costs or fees negotiable, or capable of being waived?
o. Which financial firm will service the loan?
o. How long does the funding process usually take? Are on-time closings guaranteed?
o. What changes, such as employment changes, should I avoid before the loan closes?