Chris Boland

By Chris Boland, VP Mortgage Production Manager

If you are thinking about purchasing a new home or you know someone who is, the following information will be useful when you need to get approved for a mortgage. Prospective home buyers can meet with a North Shore Bank loan originator during Mortgage Days, which run Apr 20 to 30. The loan originator will help navigate the process. This is a big deal, as lenders now require documents logging various aspects of a buyer’s financial life, from taxable income and assets to rent payments and much more.

To get you started, here are some of the items you’re going to need to dig up before meeting with a financial institution about obtaining a mortgage.

• Income verification — This includes paycheck stubs and W-2s.

“Loan guidelines typically specify one month of verified income … and require the most recent Form W-2, but some borrowers are asked for two years of W-2s,” says financial publisher Bankrate.com.

• Tax documents — Be prepared to provide two years’ worth of recent tax returns, including all the pages and schedules.

“Tax returns are scrutinized for unreimbursed employee business expenses, self-employment business losses and telltale signs of loan fraud, such as reported income that doesn’t match an employee’s W-2,” Bankrate.com says, adding that borrowers must also sign IRS Form 4506-T to allow lenders to receive a transcript of the tax return.

• Financial institution, investment, and tax documents

The most recent month’s bank and investment information must now be supplied to mortgage lenders, in most cases. For large loans, your lender could request up to three months of statements.

• Profit-and-loss statement — If you are self-employed and run your own business, you will have to submit a current-year profit-and-loss statement.

• Rental property income — If you own investment property and receive any rental income, you will need to show two years of Schedule Es on your tax returns and a two-year history of managing rental properties.

• Gift letter and corresponding paper trail (if receiving help with the down payment) — Borrowers who receive aid from family in the form of cash to go toward their down payment should be prepared to provide a letter from the “giftor” stating that the gift is just that and not a loan.

More difficult to provide is a statement showing the funds from the giftor’s financial institution, or a canceled check and the borrower’s own statement showing the funds, which may be required as well. This can be problematic because sometimes people — including Mom and Dad — don’t like to hand out paperwork regarding their overall financial well-being, even if it is for their kids.

• Other documentation — Depending on your current situation, you may be asked to provide additional documents, like a copy of a divorce decree, proof of a child’s age if child support is counted as income, bankruptcy discharge papers, and/or official letters that explain negative items on a credit report.

Another thing to consider when preparing to meet with your financial institution is to bring complete forms of every document. Provide every single page of every document, even if there’s a blank page. If a paper says there should be five pages there, the lender will want to see all five of them, just to be sure.

If you have any questions before meeting with your lender or at any point in the home-buying process, you should not hesitate to call your lender for clarification.

North Shore Bank is offering free Get Smart Home Seminars in the coming weeks, and you can sign up for a one-on-one meeting with a loan specialist in your area during Mortgage Days from Apr 20 to 30. The Mortgage Home Loan section of the bank’s website also offers helpful tools and tips to get started.