If you’ve been actively searching for a home on Cape Cod, you’ve most likely discovered that shopping for a home on the Cape is fun! After all, what’s not to love? Exploring beautiful, oceanfront neighborhoods; touring the wide variety of homes for sale; checking out the closest beaches; browsing the shops in the nearby village; and simply imagining yourself living in your dream home. It’s all good! Until you actually FIND your dream home. Then the fun quickly turns to stress as you transition from the shopping to purchasing phase.
Suddenly, you find yourself staring at a fully-executed offer sheet that is riddled with deadlines: a deadline for inspections, a deadline for the signing of the Purchase and Sales Agreement (P&S), a deadline to put up more money, and most importantly, (and unless you’re paying cash), a deadline for the mortgage commitment. The latter will require you to produce a seemingly endless trail of paperwork. You can significantly reduce your stress during these critical few weeks by getting as much of your paperwork as possible ready in advance. We call this paperwork your “green file”, and it should contain at least the following for each applicant whose name will be on the mortgage:
- Copy of your driver’s license.
- Most recent 2-3 consecutive months of statements from each of your financial asset accounts, including checking/savings, investments, IRAs, 401(k)s, CDs, etc.
- Proof of down-payment and closing costs. Lenders will want to follow the paper trail of any and all monies you’re using at closing, including the down-payment. It is best to have this money in a single liquid account for at least 2 months prior to your mortgage application. If all of the money cannot be traced in the above-referenced accounts, you need to account for it. If some of it is a gift from a relative, you need to provide proof of where it came from and also proof that it does not need to be paid back (via a Gift Letter).
- 2 years of W2s and tax returns.
- 2 months of most recent pay stubs.
- Names and addresses of employers for two years.
- If self-employed, year-to-date profit and loss statement, plus signed returns for last two years.
- If applicable, documentation related to any of the following: pension income, Social Security and Disability payments, dividend earnings, bonuses, child support payments and alimony payments.
- Information on debts, including car loans, student loans, credit cards, mortgages, etc.
Having these documents ready in advance will substantially reduce your stress level and make the home buying process far more enjoyable from beginning to end. After all, you want to spend your pre-closing time picking out paint colors, shopping for furniture and planning your move – not searching your basement for old bank statements and tax returns!
For more specific detail about what will be required in order to approve your mortgage, consult your mortgage lender. If you don’t have one, your Cape Cod Oceanview Realtor will be happy to introduce you to several reputable lenders who can help find the best loan for your needs.