You’ve been saving up for your down payment and spending hours gazing at online listings. You’re finally ready to jump in the arena and compete with other buyers searching for their dream home. But before you contact a local Marin County real estate agent (my number is 415-505-4789) and begin your new home hunt in earnest, you need to know what you will need when you start the process of getting pre-approved for your mortgage.
Your lender will want to check your financial background to size up whether you can afford the place you’re eyeing. That means you’ll have to round up some paperwork as proof.
So here’s a handy checklist of five things you’ll need to buy a Marin County Home. This list may vary from lender to lender, but the items below are typically required by all lenders to get pre-approved for a mortgage.
To ensure you have the income history to buy a house, most lenders will ask for two years’ worth of tax returns, two years of W-2’s, or both. This is definitely the case for freelancers and self-employed borrowers, but full-time employees may be asked for all of this paperwork as well. Your lender may even retrieve your tax returns themselves straight from the IRS (with your written permission, of course), since this cuts down on potential fraud. Still, it’s a good idea to get those documents in order just in case.
Tax returns won’t be where your proof of income ends. You will also need to rustle up copies of your past two months of pay stubs, according to Martha Witte, vice president of FM Home Loans. If you’re self-employed or freelancing, things get a bit more complicated.
Also be prepared to show a projected balance sheet, detailing what you’ve earned this year and what you plan to earn in the coming months.
“It doesn’t need to be fancy, but it should ideally support that you are on track to have consistent income in the current year, when compared to other years,” Witte says.
You will also need to show two months of asset statements—think your checking and savings accounts. This one is a biggie because your lender will use these statements to prove you have enough money available to buy a home and then some.
“You will need liquid funds available for the down payment and to cover closing costs. You will also need reserves after closing, which means you can’t be left with $0 once you buy the home,” Witte says. While the reserve amounts vary, two to four months of reserves is enough for most conventional loans, she says.
- A 24-month residential history is required. Also, you will be required to verify your mortgage or rent payment history. Questions to expect include:
- What is your current address?
- How long have you lived at your current address?
- Are you currently renting or do you own?
- How much do you pay per month in rent or mortgage?
- Have you ever been late on your payments?
- What are the names and contact information for your current and previous landlords?
Documents for your Down Payment Gift
Finally, if you’re planning on getting a portion of your down payment as a gift (you lucky dog, you), plan on getting some documentation from the gift-giver(s), like copies of their checking or savings account monthly statements. “We need to also verify the donor’s ability to give the gift,” Witte says.
You also need to properly document the gift. There are three very important steps to follow to do so:
- Step One: Write your “Down payment gift letter”
- Step Two: Document the gift from the gift-giver(s)
- Step Three: Document receipt of the down payment gift.
For more information on how to properly receive a down payment gift, read this article from the Mortgage Report: How to Give and Receive a Cash Down Payment for a Home.
When in doubt, follow this simple rule of thumb from Witte: “Follow the rule of twos,” meaning you’ll need a two-year snapshot of your income and finances.
This article was adapted from the Realtor.com article: What You Need to Buy a Home
Other excellent recommended reading:
The Documentation Required for Today’s Lowest Mortgage Rates from the Mortgage Reports
Financial Mistakes of First Time Home Buyers by Bill Gassett
Eight Articles Every Buyer Should Read by Nathan Garrett
About the Author: The article Five Things You’ll Need to Buy A Marin County Home was written by Sylvie Zolezzi. I live in Marin, work in Marin and LOVE Marin!!! I am an award winning, top producing Realtor specializing in luxury residential real estate in beautiful Marin County, just north of the Golden Gate Bridge.
I offer a wide range of innovative and comprehensive real estate solutions for buyers, sellers and investors, attracting clients who demand excellence—in marketing, negotiations, market intelligence—and a genuine concern for their needs. My association with Golden Gate Sotheby’s International Realty allows me to provide a high-end luxury experience to all my clients at every single price point. It also empowers me to leverage the unique combination of Sotheby’s global resources, Golden Gate Sotheby’s International Realty’s growing market share and local knowledge with my unmatched social media networks to provide highly personalized service and unmatched exposure to my clients’ properties locally and worldwide.
I would welcome the opportunity to work with you. I can be reached via email at Sylvie@YourPieceOfMarin.com or by phone/text at 415.505.4789.