If you have ever wandered along with a real estate agent, you should know what paperwork is needed to buy a house. And you must have experienced how stressful the home-buying process is. Discovering the perfect property, shifting from the current location, and securing a loan sanction can be a lengthy and challenging process. Juggling from place to place just to find a perfect dream house for your family can be a tough job to go through. But the twist is still halfway through to play a part in the home buying process.
As you know, it requires a staggering amount of paperwork when buying a house. From income verification to copies of tax forms, your head might be swimming to track what paperwork is needed to buy a house. And you can’t really trust your agent, mortgage lender, and title company to provide you with correct information, especially when it involves money. It means you better have your facts straightened out before you dip your toe into fraudulent activity. Even if you find a trustworthy agent who can help you collect documents needed to buy a house, your precise data can lessen the burden. You will still need to manage documents like co[ies of driver's license, print out a pay stub, and papers from a lender.
At the same time, you do not need to worry about preparing many of the forms in a novel-length stack. Here are the six critical documents needed to buy a house that you should be aware of and pay close attention to.
Before jumping on the detailed information for paperwork for buying a house, take a look at the lists below.
- Proof of Income and Assets
- Tax Documents
- Pay Stubs
- Bank Statements
- Business Documents
- Information on Debts
- Proof of Employment
- Credit Report
- Loan Estimate
- Purchase Agreement
- Government ID
- Confirmation of Property
Now that you know the context of this guide let’s start with the documents needed to buy a house.
Proof of Income and Assets
If you are thinking of applying for a mortgage pre-approval with a lender, you are required to show them proof of income. Also, it depends on the lender about what type of documents they would request you to submit. If you are pondering the question “what paperwork is needed to buy a house,” you must look at the following documents. And get them prepared as soon as possible before you take a step towards buying a house.
Tax Documents
If you are getting ready with the required paperwork for buying a house, tax documents are the utmost important paperwork. You should keep at least two years of tax returns and W2s, as it will support your income history. In case you have not already prepared your tax document, you must ensure to sign the tax documents. If you have restored a long-term account that shows your ability to pay the mortgage over the loan's life span, then it must be at least 30 years. But unfortunately, if your income history has changed drastically year after year, your lender may ask you to explain the documentation variation.
Pay Stubs
When buying a home, lenders require proper information about your stable income that will allow you to pay the mortgage each month. And the same requirement from the Bank is at least 30 days of income using the pay stubs. In case you do not acquire paper copies, you need to contact the Human Resource department of your workplace for digital stubs. Now, you know why it is necessary to secure pay stubs for paperwork for buying a house.
Bank Statements
If your question is why do you need bank statements among loads of paperwork for buying a house, there is a perfect explanation. Any lender cannot just offer the keys to the house. They will need proof of what you have been doing with your income and how it will be helpful to trust you with the mortgage payment. Lenders will need a snapshot of the money coming and going from your bank account. And in most cases, 30 to 60 days of transactions will be sufficient to give them proof.
Business Documents
In case you are self-employed, operate a business( regardless of the business scale type), or work as a contractor, you need to prepare this document. When you are contacting a lender for paperwork for buying a house, you are required to show them the tax returns (they must be signed) along with the year-to-date profit and loss statements.
Information on Debt
Lenders will also require to know how much debt you are already carrying. It will help them determine if you can make the payment on the mortgage along with the existing debts. They could also request divorce decrees with the evidence of child support or spouse you owe. Also, do not forget that they might need you to verify if you have any student loans, bankruptcy paperwork, or car loans. While thinking about documents needed to buy a house, you need to prepare this one, as they are a part of the proof that you can handle the mortgage payment.
Proof of Employment
Are you pondering over the question “what documents do I need to buy a house” over and over again? Then you must prepare the proof of employment as one of the six legal documents required when buying a home. Your lender will want to know that you can consistently make payments right on time. It will base your mortgage pre-approval amount on the part over your monthly income. Along with the pay stubs, the lender may call your employer to verify the employment. And they might verify your employment a few days before the mortgage closes.
Credit Report
When it comes to credit reports, it contains information on your payment history, debts, and collections. The credit bureaus utilize the information on the credit report to create a credit score. And you must aim for the higher score, as the higher, the better. Lenders will pull your credit report and score in order to perform the assessment on your ability to repay the loan. Among loads of required paperwork for buying a house, a credit report creates marking on your payment ability. So, make sure to maintain the score to the highest point.
Loan Estimate
Now, the loan estimate is something that the law requires the lender to send within three business days to you. It might be a brief but complete financial estimate of the applied-for-loan. You can consider it a cheat sheet for paperwork for buying a house, as it shows you committing to everything, excluding the loan terms. The loan estimate will include:
- Monthly mortgage payment
- Estimated interest rate
- Estimated closing costs
- Potential penalties
- Estimated closing costs
However, the loan estimate does not indicate your loan status. By the time it is sent out, the lender may have already taken the decision about approving or denying the loan application.
Purchase Agreement
This is the utmost important paperwork for buying a house which is signed by both the parties, the buyer and the seller. It formalizes the purchase and commits both parties to the terms and conditions of the contract. The purchase agreement spells out these financial document requirements:
- Property description and condition
- Purchased price
- Identification details for both seller and the buyer
- All items included in the sale, including appliances
- Closing date
- Terms of possession
- Signature by both buyer and seller
- Earnest money deposit amount
While you do not have a hand in generating these documents, it is secure in your home sale.
Government ID
Sometimes, you might need your driver’s license as well for the closing table. When it comes to documents needed to buy a house, a government ID can be more substantial proof to some lenders or match the identity from each of your papers. At the time of closing the deal, you will be required to stamp the identity. For that, you can bring a passport, driver’s license, or any other government-issued photo ID. It will help you prove that you have a legal right to sign the homeownership deal after verifying a plethora of paperwork.
Confirmation of Property & Residential History
In case you own any other property or have held it in the past, you must be prepared to show proof of ownership or sale. You can create a list of history and residential proof you have owned in the last two years, along with the landlord’s name. And do not forget to provide the contact numbers, if applicable.
Conclusion
When struggling over what documents do I need to buy a house, it can be overwhelming and challenging. And when you have to go through the endless document required to complete the process, you can make the mistake of believing a complete stranger. Now, before you lose your money and a chance of buying a dream house, visit us at Daher Construction LLC. Here we provide solutions to all your property-related queries, including legal documents required for a home buying process. If you need to learn more about protecting your dream house, let us help you with our reliable resources.