Getting ready to apply for a mortgage? Whether it is your first one or you’ve already had several, most couples find the paperwork to be something that takes quite a bit of effort. It’s certainly understandable that a lender would want to see detailed records before they give you a mortgage. But if you are like most people that have a job, family obligations and are also busy in your community, then preparing this information to apply for your mortgage can sometimes seem like quite a frustrating task.
We have some secrets to preparing your documents that are quite helpful. One of the best things about following our recommendations is that once you put them in place, you will only have to update them with your most recent documents because you’ll have everything else already organized and prepared. While no one likes to think about the next time they’ll be applying for a mortgage when they’re in the middle of applying for one, it is important to keep in mind that experts say most families live in about 5 to 7 different homes on the average.
Start by buying a large, fireproof box to store everything. No one likes to think about fires or other natural disasters, but sadly they do happen. If you store everything in a fireproof box, then these documents will be secure and protected from most things that could happen. They can save you not only hours but perhaps weeks and months of re-obtaining documents to get a new mortgage. Most fireproof boxes are quite budget friendly, you’ll typically spend about $30 for a good sized one that will hold letter sized documents.
Get a safety deposit box at the bank if needed. This is another thing to consider and can really depend on your situation. Some may decide that a fireproof box is enough. Others may want to secure a copy of all of their documents in a safety deposit box at the bank. To get a safety deposit box at the bank, you often need to have a checking account at that bank and you pay a small fee of about $25 for a year’s rental. At some banks you can only access the box during bank hours.
Buy a great combination printer that can copy documents, scan, fax and also print them. Here is another budget friendly purchase that is a tremendous time save for you! Don’t waste your time and efforts going to the copy place over and over again. Spend about $100 and get a combination printer so you can easily manage your documents. Scan all documents to a thumb drive and keep it in a cool, dry place such as a filing cabinet. From this machine you can also make several copies of each document, it is advised you make copies for each lender that you apply to get a mortgage from. You will also want to have paper copies of your documents in your fireproof box, your security box and also on hand perhaps in your at home filing cabinet so they are easy to reach.
Work with your spouse or partner to create an organizational system you both like. Here we’ve suggested several inexpensive and secure ways to keep these documents. Remember that your mortgage application documents are going to include 5 years of your taxes, a year of pay stubs, proof of employment, a year of statements that you have paid rent. Each of these documents includes highly personal information about you and your spouse that you will want to protect. Work with your spouse or partner to decide on which ways you would like to store the documents. We recommend you choose at least 2 different ways, so you always have a backup. It is also ideal if you select either the fireproof box or the security box at the bank, as either should protect in the case of natural disasters and most emergency situations. If you choose systems together, you are more likely to stick to them and use them regularly. That matters more than which actual systems you select.
Always create several copies of each document. This is one tip is absolutely critical. You do not want to have only one copy of these documents and then hand them to a lender for consideration on a mortgage. What happens if that person quits or goes on vacation? What happens if they lose your documents? What happens if their assistant feeds the documents into a fax or copier, and some of them wind up getting stuck so they become destroyed in the process? Give yourself the peace of mind of always having clean, crisp extra copies. You will worry far less. It also means you will be able to apply with other lenders quicker, especially if your lender has delays and you see a great opportunity with a very competitive rate out there.
The simplest way to organize paperwork is often in alphabetical order and also by date order, but not always! One of the documents your lender gives top priority to is that you’ve paid your rent regularly and on time. So this document or set of documents really should go first when you submit them. Other documents you may find easier to sort alphabetically so they are easiest to find. We also recommend that you create a cover letter, so the lender understands exactly which documents you are giving them when you submit your packet of information to them.