Income Documentation

Your income documentation should include your most recent 30 days of pay, year-todate earnings, your name, and your employer's name. If you have rental income, this must be documented by providing a 12-month lease agreement signed by the tenants and signed tax returns, including all schedules for the previous two years. For selfemployment income, you must provide the last two years' personal and business tax returns.

Asset Documentation

Bank statements should clearly show the account holder's name, bank's name and address, account number, beginning and ending balance, and all credits and deductions for 60 days. All pages, even if they are blank, should be included.

Gift Funds and Sale of Personal Assets

Gift funds or the sale of a personal asset used as a source of funds for your loan should be appropriately documented.

Letters of Explanation

Letters of explanation will be required for name variations, employment variations or gaps, derogatory credit, address variations, credit inquiries, overdrafts, and nonpaycheck deposits inconsistent with prior activity in your bank accounts. All letters should be signed and dated.

Sale of Departure Home

If you're selling a home, a fully executed CD (Closing Disclosure) for that property is generally sufficient. If your departure home is eligible for a corporate home sale program through your employer, you may provide any of the following documents in place of a fully executed CD:

• The corporate buyout agreement.

• An equity statement showing the amount and date of equity disbursement.

• A fully executed purchase agreement from a third party.

VA and FHA Loans

If you're obtaining an FHA loan or putting less than 10% down on a conventional loan, the corporate buyout agreement must be executed by the closing date on your new home. Any negative equity/loss on sale must be satisfied on an FHA loan before closing on the new home. For VA loans or if you're putting 10% or more down on a conventional loan, the closing on the new home may occur if the corporate buyout agreement won't be fully executed, given that you provide an unexecuted copy of the corporate buyout agreement with a signed letter of intent. If negative equity/loss on sale exists, sufficient assets must be sourced to cover the amount of the loss.

Letters of Explanation

In some instances, you may be asked to provide letters of explanation for certain situations like employment gaps, derogatory credit, address variations, credit inquiries, overdrafts, or non-paycheck deposits inconsistent with prior activity in your bank accounts. These letters must reference the specific instance and detail why it occurred and why it won’t occur again. Remember to sign and date all letters of explanation.

Following these guidelines can significantly streamline your loan process and be better prepared when applying for a loan. As always, I'm here to guide you on this journey. If you have any questions or need further clarification, please get in touch with me at 850.830.1801.

Remember, the path to homeownership can be complex, but with the proper guidance and preparation, it becomes a much more manageable and enjoyable journey. So, here's to your future home!

Sincerely,

Garett Huber

30A Real Estate Advisor Compass