Today, many people conduct their financial lives online. If you like the convenience of direct deposit, online banking, or electronic tax filing, much of your financial history is stored online. But when it comes time to applying for a mortgage, the lender will want to see a paper trail that documents all of these activities, plus your income, debts and assets.
Here is a checklist of the documents you will need:
• W-2 forms for the most recent 2 years.
• Pay stubs verifying your income for at least the previous month. Employees who are paid electronically may be able to access a corporate website and print out pay stubs.
• Most recent federal tax return, and possibly tax returns for the previous 2 years.
• A complete list of your debts, such as credit cards, car loans, student loans and child support, along with minimum monthly payments and balances.
• List of assets, including bank statements for the previous 3 months, brokerage statements, real estate and automobile titles, and records of other investments and assets.
• Canceled checks or rent receipts for rent or mortgage payments.
It is not necessary to alter your online financial behavior when you apply for a mortgage – just keep good records. The rule of thumb is that you should keep financial records going back at least 3 years. Organize these records by category: pay stubs, bank statements, credit card statements, car payments, rent receipts, student loan payments, etc. Keep tax returns going back at least 7 years. If you organize and file statements as they come into your home – either in paper form or in electronic folders on your personal computer – you will easily be able to lay your hands on all the different documents a mortgage lender will want to see when the time is necessary.
By keeping all of your documents organized and readily accessible, you’ll have more time to spend looking for a property and need less time gathering your financial documents when you need them.