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Getting
Your Finances in Order
 A
crucial step in starting your search for a new home is having a clear
idea of your financial situation. By getting a handle on your income,
expenses and debts, you'll have a much better idea of what you can afford
and how much you'll need to borrow.
For
lenders to verify this information, though, they're going to need to look
at your financial records. It is also important to remember that you should
include records for each person who will be an owner of the house. So
before you even visit the bank, make sure you'll be able to provide copies
of these important documents:
- Paycheck
Stubs
Remember that lenders are most interested in your average income.
Not only will they want to see this month's paycheck, but also how
much you've been making for the past two years. Steady employment
is also more attractive to lenders, so if you've been hopping from
job to job, be prepared to discuss the reasons why.
-
Bank Statements
In order to qualify you for a loan, most lenders will also ask you
for copies of your bank statements. Ideally, they'd like to see a
steady history of savings--or at the very least, that you're not bouncing
checks every month.
- Tax
Records
It's always a good idea to save copies of your tax returns, especially
if you're self-employed. If you own your own business, it's important
to note that lenders generally consider your income as the amount
you paid taxes on--not the gross income of the business.
- Dividends
& Investments
Lenders will usually consider long-term investment dividends, as well
as your investment portfolio, when evaluating your income.
- Alimony/Child
Support
If you receive steady payments as part of a divorce settlement or
for child support, you can also include this as part of your gross
income. Just remember that lenders will want to see a copy of your
divorce/court settlement verifying the amount of the payments.
- Credit
Report
Virtually every lender will want to see a copy of your credit report
as part of the loan application process. The report lists all of your
long-term debts, as well as your payment history. In general, they
will require you to pay for the credit report (approximately $50),
but if you have a recent copy, they may accept that instead.
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