Loan Application: What You Need
Applying for a home loan when purchasing lake property can be an easy process if you remember that using an unfamiliar or out of area lender can complicate and delay the final approval. Whether it's a lake front home or condo, there are several issues that can create delays, such as flood zone, personal property (furniture, docks), shared community wells, septic systems or even Saturday closings. Choosing a local lender will mitigate most of those issues and make the process much easier to navigate.
Once you've chosen the lender, there are a few things you should ask. First of all, ask how long the loan approval process will take. Typically, you should allow at least 45 days for loan approval, but that can be extended if you delay getting pertinent information to the lender. It's important to provide items in a timely manner since you will probably have a finance clause contingency within the sales contract.
Now get ready—the following is what you may need when applying for that loan:
Asset items:
l. Bank statements for previous two months (sometimes three) on all accounts. All pages, even if you don't think them important.
2. Statements for two months on all stocks, mutual funds, bonds, etc.
3. Copy of latest 401K statement (or other retirement assets because they can count as reserves).
4. Explanations for any large deposits and source of those funds.
5. Copy of HUD1 Settlement Statement on recent sales of homes or copy of Estimated HUD1 Settlement Statement if a previous home is for sale, but not yet closed.
6. Gift letter (if some of the funds come as a gift from a family member - the lender will supply a blank form). Gifts can also require verification of donor’s ability to make the gift (bank statement), copy of the check used to make the gift, and/or copy of the deposit receipt showing the funds deposited into bank account or escrow.
Credit items:
l. Landlord’s name, address, and phone number (if you rent - for verification of rental).
2. Explanations for any of the following items which may appear on your credit report: Late payments; Credit inquiries in the last 90 days; charge-offs; collections; judgments; liens; copy of bankruptcy papers if you have filed bankruptcy within the last seven years.
Income items:
l. W2 forms for the last two years.
2. Most recent pay stubs covering a 30 day period.
3. Federal tax returns (1040’s) for the last two years, if: you are self-employed; earn regular income from capital gains; earn sizable interest income, etc.; earn more than 25% of your income from commissions or bonuses; own rental property; or are in a career where you are likely to take non-reimbursed business expenses).
4. Year-to-Date Profit and Loss Statement (for self employed); corporate or partnership tax returns (if you own more than 25% of the business).
5. Pension Award letter (for retired individuals).
6. Social Security Award letters (for those on Social Security)
Miscellaneous items:
l. Copy of purchase agreement (if you have already made an offer).
2. To document receipt of child support (if you desire to show it as income); copy of Divorce Settlement (to show the amount); copies of twelve months canceled checks to document actual receipt of funds.