Looking for a Loan? Start Compiling This Paperwork.

By Ilyce R. Glink and Samuel J. Tamkin
Saturday, September 13, 2008

When it comes to getting a home loan, the game has changed dramatically.

A year or two ago, it would have been easy to get any kind of home loan offered -- or to be creative and basically invent your own terms.

Want an interest-only loan? No problem. An option ARM, whereby you choose how much you pay? Done deal. Don't want to provide any documentation? That works.

While mortgage lenders still pulled your credit history and credit score, few said no. Even if you had a credit score in the low 500s, you could still get a loan. You might pay a higher interest rate or higher fees, but someone would say: "Yes. Sign here, please."

Today, home buyers and homeowners are having a lot of trouble getting loans. Lenders are saying no even when people have good credit scores.

What has changed is how much risk some mortgage investors are willing to accept in the face of mounting losses.

To increase the likelihood that you'll get the home loan you need, start with getting your documentation together.

Mortgage lenders aren't in the tree-saving business. They like paper and use a lot of it. To apply successfully for a home loan, gather the following information:

· All W-2 forms for each person who will be a borrower on the loan. You'll also want to provide contact information for your boss or a human resources manager so the lender can verify your income.

· Copies of completed federal tax forms for the past two or three years, including any schedules or attachments. These are required primarily of self-employed individuals or those who are claiming a history of rental income. You won't need your state returns.

· Copies of one month's worth of pay stubs.

· Copies of the last two or three statements for every bank account, IRA, 401(k), Keogh, or other retirement account or brokerage account the borrowers own.

CONTINUED     1                 >

© 2008 The Washington Post Company