Banks are lending once again. Yes that is true but if you have not dealt with the banks for any type of lending activity during last 4 years then you might want to be cautious about placing your offer on home or any property that you are considering to buy.

 We had bought our first home in 1999 and at that time I was surprised how easy it was to get the mortgage on the home. We were just asked to provide our paystubs and I am sure our credit rating was checked but other than those two formalities I don’t think we were asked for any other document.

 Recently we decided to buy a home with land, so started hunting for mortgage and picked one of the largest bank. Since we have maintained our credit rating well since 1999, I was quite hopeful that getting mortgage will not be an issue.

I was wrong and you would not believe how many conference calls I had to be with the underwriter. It was not easy, this time bank had asked for lot many details and that was quite painful. I am absolutely not against any documentation and hey this loose lending had put the nation where we stand today but I guess one should be aware of what could come on their way in terms of producing documents, here is the list:

  1. Get ready for 20% down payment
  2. 2-3 years of tax returns
  3. 2 -3 months of salary stubs
  4. Bank statements
  5. Your 401K statements
  6. Statements of any other investments
  7. Explanation of credit card transactions which are more than $500
  8.  Explanation of any transfer of funds e.g. if you are moving money from your checking or savings account to money market accounts, you need to produce statements for all accounts.
  9. Bank might not accept bank statements created through web browser.  They need actual proof of statement.
  10. If your SSN was delayed for some reason, you might need to explain the same.

 Things get tougher if you are self-employed or purchasing the property for investment purpose, you might be asked to produce more documents. Pre-approval before you bid for the property seems to be a good idea but pre-approval from bank does not really guarantee that you will get mortgage, read the contingencies related to the pre-approval and see what all documents you might need to provide.

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