Before You Buy

It is crucial that you enter your search for a new home with a clear understanding of your financial situation. Being prepared in this way will aid greatly in narrowing your search to what you are able to buy. It will, also, reduce the amount of headache and disappointment that may otherwise occur because you are entering your search with a comprehensible view of your closing.
Lenders will not lend unless you can show proof of some financial stability. They will want to see the financial records for any owner, or cosigner of the loan agreement. Before you approach a potential lender, make sure to have copies of the following documents:

Paycheck Stubs

Lenders want to know your average income. You will need to be able to show them this month’s paycheck, as well as proof of what you have made in the last two years time.
They will be apprehensive about lending to someone who has hopped from job to job as compared to someone who has held a stable job for some time. If you have not held a stable job, you must be prepared to give an account for the reasons why.

Bank Statements

Most lenders will require you to produce copies of your bank statements over a period
of time. When they ask for this, they want to see proof that you do not bounce checks
every month and that you have a record of steady deposits and some kind of history for saving.

Tax Records

Saving copies of your tax returns can be beneficial to you when approaching a lender, particularly if you are self-employed. Lenders generally consider your income as the amount you paid taxes on, not the gross income of the business.

Dividends & Investments

When evaluating your income, lenders usually take into account long-term investment dividends, as well as your investment portfolio.

Alimony/Child Support

If you receive monthly payments as a result of a divorce settlement, or for child support, you can include this as part of your gross income. Just remember that lenders will demand to see a copy of your divorce/court settlement verifying the amount of the payments.

Credit Report

Virtually every lender will need a copy of your credit report as part of the loan
application process. This report lists all of your long-term debts, as well as your payment history. Although they generally run the credit history on you, they will require you to pay the cost of the credit report (approximately $50), but if you have a recent copy, they may accept that instead.
By preparing your financial records in advance, you will spare yourself stress and wasted time when you approach a potential lender… making your buying experience a much more pleasant one.