Key Takeaways
- Buying a house involves providing a vast array of documents.
- For example, you will need paperwork to prove your identity, identify your assets and much more.
- You will also need to memorialize contracts you enter into with the seller and transfer ownership of the house.
Along with the excitement of purchasing your next home come numerous decisions. Homebuyers must decide on the home's location, size, and style, determine their budget, and consider maintenance costs and subsequent property taxes.
However, one aspect of home buying that many first-time homebuyers are unaware of is the amount of paperwork involved. There are documents at every step — some facilitate the actual transfer of the house, others prove identity, and some show your ability to afford the purchase.
Homebuyers can make the process less overwhelming by taking steps to prepare before starting. Gathering and making multiple copies of necessary documents in advance can significantly reduce the time it takes to close on a dream house and walk away with the keys in your hand.
In this article, we will provide a list of the documents you require at each transaction stage. We grouped the paperwork in the order you will likely encounter: Pre-approval, offer-making, and closing. Let's discuss pre-approval first.
Documents You Need for Pre-approval
If you are like most Americans who require financing to buy a home, the pre-approval process provides an estimate of the amount a mortgage lender will be willing to loan you to purchase a home.
The process involves many documents proving that you are a citizen or a legal resident with an income and a good credit score. The documents serve different purposes, as shown in the lists below.
Proof of identity
First, you will need to prove who you are with one of the following.
- A driver's license, Social Security card, Passport, US Military card, permanent resident card, or another acceptable document to prove your identity.
- Previous and current residential addresses you have lived at for at least the past ten years.
Proof of employment
In addition to proving employment, some of these documents, such as the pay stubs, help the financial institution track the consistency of your income — if it has increased, reduced, or remained constant for the period in review. A steady income is ideal.
- Pay stubs for the past 30 days: Pay stubs are often available on your employer's employee website. You can download and print them online or request them from the accounting department.
- Self-employment tax returns: To get a copy of your tax returns, submit Form 4506, Request for Copy of Tax Return online.
- Names of employers over the past two years.
Proof of income
Income can come from self-employment and other employers. Mortgage companies will ask for the following documents.
- Banking records for your business (if you are self-employed)
- Personal banking records for your savings and current bank accounts
- Proof of additional income
- W-2 forms for the past two years
- Other income sources include alimony and social security
List of assets
Mortgage lending companies are interested in your income because that's how they determine your ability to repay the loan.
- Signed property deeds and titles for real estate you own
- Car titles
- A gift letter (if a family member covers all or part of the down payment cost)
- Proof of investments and trusts
- Retirement accounts
Disclose debts
Your indebtedness affects your credit score, which determines the loan terms of the mortgage you receive and whether you will be pre-approved in the first place. You may be able to get a loan with bad credit, but the repayment terms are often less than favorable. For this, you will provide the following documents:
- A credit report with your credit history
- Credit card statements
- Auto loan and other personal loan statements
- Student loan statements
Of these documents, the credit report is the most comprehensive because it has all your debts, repayment history, and any accounts in collections. It allows the lender to determine how financially responsible you are.
Credit reports are available for free annually from the three major credit reporting agencies — TransUnion, Experian, and Equifax.
Some lenders may seek additional documents to clarify any issues on your credit report. For example, if you receive a gift to cover the down payment within 60 days before applying for a mortgage, they may request additional documents to ascertain that the money is, in fact, a gift.
Be prepared to provide everything they need to speed up the process.
Documents You Need After Approval
Receiving your pre-approval letter is exciting, but then comes the search for your dream home that fits your budget. When you find one you like, you can start making offers and negotiating, which comes with its fair share of paperwork. If you are working with an agent or a real estate attorney, they can help you obtain the documents you need.
The offer
You may have seen those television shows where buyers tell their agents how much they are willing to offer on a home they like. The reality is more complicated than that. You have to write down your offer with the amount you are proposing and how long it stands.
Also include conditions, such as an inspection contingency, who pays which closing costs, and clear title requirement. The seller may send a counteroffer, and you can accept, re-counter, or walk away.
Purchase agreement
When the seller accepts your offer, you enter into an agreement. The contract, called a purchase agreement, sets out the rules for the entire transaction. It outlines the terms and conditions for the purchase.
After signing the document, you typically pay earnest money to reiterate your commitment as you conduct a title search, perform inspections, and obtain financing.
Make your Purchase Agreement now
Title search
You must determine whether the house has liens or other attached financial obligations that may transfer to you after closing. You can perform an online title search, but most reputable lenders require a professional, such as a real estate attorney or title company, to do it.
Real Estate Closing Documents
You and the seller both bring documents to the closing. You will encounter the following paperwork:
- Loan application
- Deed of trust or mortgage
- Escrow statement
- Deed
- Closing Disclosure
- Affidavit of title
- Certificate of occupancy if you are buying a newly built house
- Transfer tax declaration
- Homeowners Insurance
- Title insurance policy
- A cashier's check for your closing costs
The title for the home may remain with a title company until you have paid off your mortgage.
Whether you are looking for a house for the next few years, a forever home, or an investment property, purchasing a house is a significant undertaking. Don’t let the sheer volume of paperwork intimidate you.
Patience and working with an experienced real estate professional can take much of the stress out of the process, as well as preparing documents with templates beforehand.
See All Our Real Estate Documents
Helpful Resources:
Key Takeaways
- Buying a house involves providing a vast array of documents.
- For example, you will need paperwork to prove your identity, identify your assets and much more.
- You will also need to memorialize contracts you enter into with the seller and transfer ownership of the house.
Along with the excitement of purchasing your next home come numerous decisions. Homebuyers must decide on the home's location, size, and style, determine their budget, and consider maintenance costs and subsequent property taxes.
However, one aspect of home buying that many first-time homebuyers are unaware of is the amount of paperwork involved. There are documents at every step — some facilitate the actual transfer of the house, others prove identity, and some show your ability to afford the purchase.
Homebuyers can make the process less overwhelming by taking steps to prepare before starting. Gathering and making multiple copies of necessary documents in advance can significantly reduce the time it takes to close on a dream house and walk away with the keys in your hand.
In this article, we will provide a list of the documents you require at each transaction stage. We grouped the paperwork in the order you will likely encounter: Pre-approval, offer-making, and closing. Let's discuss pre-approval first.
Documents You Need for Pre-approval
If you are like most Americans who require financing to buy a home, the pre-approval process provides an estimate of the amount a mortgage lender will be willing to loan you to purchase a home.
The process involves many documents proving that you are a citizen or a legal resident with an income and a good credit score. The documents serve different purposes, as shown in the lists below.
Proof of identity
First, you will need to prove who you are with one of the following.
- A driver's license, Social Security card, Passport, US Military card, permanent resident card, or another acceptable document to prove your identity.
- Previous and current residential addresses you have lived at for at least the past ten years.
Proof of employment
In addition to proving employment, some of these documents, such as the pay stubs, help the financial institution track the consistency of your income — if it has increased, reduced, or remained constant for the period in review. A steady income is ideal.
- Pay stubs for the past 30 days: Pay stubs are often available on your employer's employee website. You can download and print them online or request them from the accounting department.
- Self-employment tax returns: To get a copy of your tax returns, submit Form 4506, Request for Copy of Tax Return online.
- Names of employers over the past two years.
Proof of income
Income can come from self-employment and other employers. Mortgage companies will ask for the following documents.
- Banking records for your business (if you are self-employed)
- Personal banking records for your savings and current bank accounts
- Proof of additional income
- W-2 forms for the past two years
- Other income sources include alimony and social security
List of assets
Mortgage lending companies are interested in your income because that's how they determine your ability to repay the loan.
- Signed property deeds and titles for real estate you own
- Car titles
- A gift letter (if a family member covers all or part of the down payment cost)
- Proof of investments and trusts
- Retirement accounts
Disclose debts
Your indebtedness affects your credit score, which determines the loan terms of the mortgage you receive and whether you will be pre-approved in the first place. You may be able to get a loan with bad credit, but the repayment terms are often less than favorable. For this, you will provide the following documents:
- A credit report with your credit history
- Credit card statements
- Auto loan and other personal loan statements
- Student loan statements
Of these documents, the credit report is the most comprehensive because it has all your debts, repayment history, and any accounts in collections. It allows the lender to determine how financially responsible you are.
Credit reports are available for free annually from the three major credit reporting agencies — TransUnion, Experian, and Equifax.
Some lenders may seek additional documents to clarify any issues on your credit report. For example, if you receive a gift to cover the down payment within 60 days before applying for a mortgage, they may request additional documents to ascertain that the money is, in fact, a gift.
Be prepared to provide everything they need to speed up the process.
Documents You Need After Approval
Receiving your pre-approval letter is exciting, but then comes the search for your dream home that fits your budget. When you find one you like, you can start making offers and negotiating, which comes with its fair share of paperwork. If you are working with an agent or a real estate attorney, they can help you obtain the documents you need.
The offer
You may have seen those television shows where buyers tell their agents how much they are willing to offer on a home they like. The reality is more complicated than that. You have to write down your offer with the amount you are proposing and how long it stands.
Also include conditions, such as an inspection contingency, who pays which closing costs, and clear title requirement. The seller may send a counteroffer, and you can accept, re-counter, or walk away.
Purchase agreement
When the seller accepts your offer, you enter into an agreement. The contract, called a purchase agreement, sets out the rules for the entire transaction. It outlines the terms and conditions for the purchase.
After signing the document, you typically pay earnest money to reiterate your commitment as you conduct a title search, perform inspections, and obtain financing.
Make your Purchase Agreement now
Title search
You must determine whether the house has liens or other attached financial obligations that may transfer to you after closing. You can perform an online title search, but most reputable lenders require a professional, such as a real estate attorney or title company, to do it.
Real Estate Closing Documents
You and the seller both bring documents to the closing. You will encounter the following paperwork:
- Loan application
- Deed of trust or mortgage
- Escrow statement
- Deed
- Closing Disclosure
- Affidavit of title
- Certificate of occupancy if you are buying a newly built house
- Transfer tax declaration
- Homeowners Insurance
- Title insurance policy
- A cashier's check for your closing costs
The title for the home may remain with a title company until you have paid off your mortgage.
Whether you are looking for a house for the next few years, a forever home, or an investment property, purchasing a house is a significant undertaking. Don’t let the sheer volume of paperwork intimidate you.
Patience and working with an experienced real estate professional can take much of the stress out of the process, as well as preparing documents with templates beforehand.
See All Our Real Estate Documents
Helpful Resources:
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