What To Prepare for Loan Applications

Documentation Needed for Loan Application

If you want to apply for a loan, it's a good idea to start gathering up all the information and supporting documentation your lender will need. It is crucial to gather the financial data that will enable you to prove to lenders that you are a good credit risk. Getting ready ahead of time and having all the documents on hand when you visit the lender will help the process move along quickly and smoothly.

For major loans, such as a mortgage, your lender will probably ask more information than you may feel comfortable with. With smaller loans, the lender's requests might not be as overwhelming. In any case, he (she) needs to know about your employment, income, assets and liabilities to determine your credit risk.

Here are the items that are commonly required by most lenders when applying for a loan.

• Last year's W-2 form.
• Signed and dated Federal Tax Returns (1040's) from the last year, including all schedules.
• Most recent pay stubs.
• A copy of your most recent mortgage statement (if available).
• A copy of the purchase contract (if applicable).
  

If you are self-employed:

• Last year's signed and dated tax return, including all schedules, a year-to-date Profit and Loss (P&L) Statement that is less than 60 days old, and a current signed Balance Sheet.
• If you're part of a corporation or partnership, provide last year's tax return for corporation/partnership including form K-1, a year-to-date Profit and Loss (P&L) Statement (less than sixty days old), and a current signed Balance Sheet
  

Depending on your individual situation, you may also have to supply some additional information. Read over this list below and see if any of it applies to you.

• If your down payment includes a cash gift from a friend or relative, you need a copy of the check or wire transfer showing the donor's name and account number, plus a copy of the deposit into your bank account. (This applies only to home purchase loans.)
  
  
• If you receive a Social Security pension or annuity, provide a copy of the awards letter and a copy of a recent benefit check.
  
  
• If you own other real estate, provide a lease/rental agreement if applicable, and copies of property tax and insurance bills.
  
  
• If you receive alimony or child support, provide a copy of the divorce decree and evidence of receipt of income for 12 months (i.e. canceled checks, deposit slips or bank statements).
  
  
• If you pay alimony or child support, provide a copy of your divorce decree.
  
  
• If you've had a bankruptcy within the last seven years, provide a copy of your bankruptcy discharge, a copy of the petition (including schedules A & B) and an explanation of the circumstances.
  
  
• If you currently pay rent, provide copies of rental payments for the last twelve months (may include canceled checks, bank statements, money orders, etc.) and the name and address of your landlord for the same time period.
  
  
  

That's it. By providing the above information when applicable, you'll help speed up the loan process.