Considering refinancing or buying a home? UNPLUG YOUR SHREDDER!

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2013-06-15_0831_001If you are like me, you probably shred just about any documents that has your personal information on it…it’s just habit or second nature. I often sort through my mail right next to our shredder.  If you are considering buying a home or refinancing your current mortgage, this is a practice you will need to reconsider.

The mortgage process will require that you provide all sorts of documentation.

Initially, you will probably provide your mortgage originator your:

  • last two years of W2’s
  • last two years of tax returns (if your self employed, have bonus or commission income or have rental property)
  • most recent paystubs covering 30 days of income
  • social security award lettters
  • most recent bank statements or asset accounts demonstrating funds for closing

As you continue through the mortgage process, you may be asked to provide:

  • updated paystubs (until closing)
  • updated bank statements/asset accounts (until closing)
  • documentation for large deposits shown on your bank statements/asset accounts.
  • updated W2’s, if you’re buying in the beginning of the year and new W2’s have been received
  • three months of bank statements if you receive alimony, child support or other types of income (to document receipt of the income)
  • HUD-1 Settlement Statements for property that has been recently sold or for property that was sold via a short sale.
  • Divorce decree/Child Support Orders/Parenting Plan
  • Bankruptcy documentation

My point is – keep everything! It’s not likely that you’re going to shred your tax returns or W2’s… however, documentation like your paystubs or bank statements are typical candidates for the shredder.

Also, be sure to take copies of everything. If your Aunt Sally gives you a $1000 check for your birthday, please take a photo copy of it before you deposit it. It’s impossible to have too much documentation while in the mortgage process.

When I’m working with home buyers or home owners who are considering refinancing, I try to obtain as much documentation as possible based on what our preliminary loan approval requests. Tax returns are not always required, but it’s not unusual once the tax transcripts are obtained form the IRS that additional income or losses are reported that may require the tax returns. It’s just better to be prepared to provide plenty of documentation while in the mortgage process.

It’s standard to have your mortgage originator obtain the first set of “supporting documentation” (documents that back up the information that you have provided on the loan application); then the processor may request additional information after reviewing your file. The processor is attempting to create a solid case for the underwriter to approve your loan. The underwriter will review everything and may require additional documentation as well (this is often referred to as “conditions” to your loan approval).  Documentation may be requested up until your loan has closed…so just be prepared. 🙂

If you are considering buying or refinancing a home located anywhere in Washington state, I’m happy to help you. Click here for a free rate quote.

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