The Ultimate Checklist For Preparing To Apply For A Mortgage

We’ve all heard the saying: House hunting is exciting, but mortgage applications are not. Gathering tax returns, proof of income, bank statements, credit reports, pay stubs, and other documentation isn’t nearly as exciting as going to an open house and picturing your family within those walls.

That’s okay; we’ll make applying for a mortgage as straightforward as possible so you can get back to the important stuff—securing your dream home!

Let’s cut through the clutter and focus on a mortgage checklist—everything you need to acquire before applying for a mortgage. First, you will understand why you should consider a credit union for a mortgage. 

Why You Should Consider A Credit Union For A Mortgage. 

There are several reasons why you should consider a credit union for a mortgage:

Lower Interest Rates: Credit unions are not-for-profit financial institutions, which means they can offer lower interest rates than traditional banks. This can save you thousands of dollars over the life of your mortgage.

Flexible Lending Requirements: Credit unions may have more flexible lending requirements than traditional banks. They may take into account factors like your credit score, income, and debt-to-income ratio when considering your application.

Personalized Service: Credit unions are often smaller than banks, which means they can offer more personalized service. You may be able to work directly with a loan officer who can help guide you through the process.

Lower Fees: Credit unions typically have lower fees than traditional banks. This can include application fees, origination fees, and closing costs.

Member-Owned: Credit unions are owned by their members, which means they are more focused on providing excellent service than maximizing profits. This can translate to a better overall experience for you as a member.

Community-Oriented: Credit unions are often community-oriented and may be more invested in the local community. This can include offering programs to help members achieve their financial goals, sponsoring community events, and supporting local charities.

Overall, credit unions can be a great option for a mortgage. They often offer lower interest rates, more flexible lending requirements, and personalized service, all while being member-owned and community-oriented. If you are considering a mortgage, it’s worth exploring the options available at your local credit union.

The Ultimate Checklist For Preparing To Apply For A Mortgage

Finance And Income Records

The following are the most frequent financial and income documents required when applying for a mortgage:

  • Pay stubs from the most recent 30 days
  • W-2 forms for the previous two fiscal years
  • The two most current statements for all checking, savings, certificate of deposit, money market, and/or securities-brokerage accounts (including full pages; online banking printouts or screenshots are not acceptable).
  • Recent statements for all retirement accounts (IRAs, SEP-IRAs, 401(k)s, and 403(b)s)
  • Your most current stock option statement, employee stock option purchase plans, and similar documents if you’re using them as a down payment or for closing costs.
  • Tax returns (the 1040s) for the previous two calendar years (include complete returns with all schedules filed)
  • Over the previous two calendar years, all federal K-1s, partnership returns (1065s), and a corporation or S Corp returns (the 1120s or 1120-Ss)

Property Records

  • Mortgage statements for all owned properties
  • Documents pertaining to real estate and property taxes
  • Insurance premium statements for all properties held, including an insurance declaration page with the name and phone number of the homeowner’s insurance agent
  • Leases on all of your rental properties (if applicable)

Personal Records

  • A copy of your driver’s license
  • A copy of your permanent resident alien card (if you are not a citizen of the United States)
  • Finish your bankruptcy documents and receive your discharge notice (if applicable)
  • Statements of settlement and divorce decree (if applicable)
  • Order for Child Support (if applicable)
  • Borrowers who work for themselves

If you are self-employed, a mortgage lender will require additional documentation. They will require:

  • Business tax returns from the previous two years, complete with full pages, schedules, and K-1s
  • A profit and loss statement for the entire fiscal year (P&L statement)
  • What if you’re retired and don’t have any pay stubs? It is not an issue. You can still demonstrate proof of income from sources such as Social Security. Borrowers who are retired may be required to provide:
  • 1099 documentation for the last two years Social Security award letter Pension award letter

Borrowers on active duty, veterans, and veteran spouses:

Some individuals may be qualified for a VA loan, which includes benefits like a low or no down payment and flexibility on standards such as credit history. These borrowers will be required to submit the following:

  • Eligibility Certificate (COE)

Additional Factors To Consider

While applying for a mortgage loan, you should be aware of behaviors that may affect your capacity to qualify, your debt-to-income ratio, or the mortgage rate you can acquire.

With that in mind, you should try to avoid the following:

  • Using credit to make major purchases, opening new credit card accounts, or closing credit cards or credit lines.
  • Shifting jobs when applying for a mortgage.
  • Transferring funds from one account to another without necessity. (If you must move money, ensure that there is a well-documented paper trail. Copies of all deposited checks, deposit receipts, and wire transfer orders should be made.)
  • Without mentioning pre-approval, no mortgage checklist would be complete. You want to know how much house you can afford before you fill out a mortgage application. This includes both the down payment and closing costs, as well as the monthly mortgage payments.

The documents required for pre-approval are identical to those stated in this mortgage checklist. The main difference is that you get your pre-approval before you start looking for a home. It shows that you’re a serious buyer with the financial means to complete the transaction. If your offer is accepted and you’re ready to close on the property of your dreams, these documents will be updated and confirmed once more.

Make The First Move

Are you ready to embark on the path to homeownership? Heritage Financial Credit Union can help you get started with a mortgage application or pre-approval. We are always available to answer any questions you have about this mortgage checklist. When you’re ready to take the initial step, give us a call.