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Mortgage: Dos and Don'ts

Updated: Sep 18, 2023

The best things you should do to prepare for a mortgage (i.e. gather pay stubs, recent bank statements,etc.) and the things you need to avoid (i.e. don't close accounts or transfer large sums of money, etc.).

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Thinking of starting the loan process? We're here to help you in any way we can. Starting with the best things you should do and the things you absolutely should not do! Your role in the loan process is very important. It is vital that you do not make any major life changes immediately before or during the loan process. Your Essex loan officer will help guide you through and make sure you do not hit any “bumps” in the road.

Tip #1 - Things you SHOULD do!

✓ Make sure you have access to original documents such as paystubs, bank statements and other important financial documents in physical or digital form.

✓ Provide a copy of your earnest money check or deposit from your own personal bank account.

✓ If you plan to receive gift funds for any portion of your down payment or closing costs, please notify your loan officer. Gift funds are acceptable only if certain criteria are met. Advances from credit cards for down payments/closing costs are never acceptable.

✓ Notify your loan officer of any employment changes such as a recent raise, promotion, transfer, or change of pay status. Employment will be verified prior to closing.

✓ Be aware that a new credit report could be pulled just prior to closing on the mortgage.

Tip #2 - Things you SHOULD NOT do!

✓ Don't close or open any asset accounts or transfer funds between accounts without first discussing with your loan officer about the proper documentation required for your loan.

✓ Don't deposit any monies outside of your automated payroll deposits, particularly cash or cash from the sale of personal property, without first notifying your loan officer. Many guidelines require substantial documentation as to the source of these deposits.

✓ Don't change jobs or employers without inquiring about the impact this change might have on your loan.

✓ Don't make major purchases prior to your contract. This includes but is not limited to a new car, furniture, appliances, etc. as this may impact your loan qualification. ​

✓ Don't open, increase or close any liabilities, including credit cards, student loans or other lines of credit during the loan process as it may impact your qualifying loan amount.

Tip #3 - Mortgage Docs to Have Ready

When you are ready to get started, here are a few of the documents that any mortgage lender would request. It is important to note that while this is a fairly comprehensive list, the documents needed from you might vary, and will be customized to your unique situation. Generally speaking, this checklist applies to purchases and refinances.

Financial and income documents

☐ Most recent pay stubs covering the last 30 days

☐ W-2s for the last two calendar years

☐ Two months most recent statements for all checking, savings, CD, money market, and/or securities-brokerage accounts (please include all pages even blank ones)

☐ Two months most recent statements (or most current quarter) for all retirement accounts (IRAs, SEP-IRAs, 401Ks or 403Bs)

☐ Most recent statement of stock options, employee stock option purchase plans, and similar only if you’re using them as part of the down payment or for closing costs

☐ Federal tax returns (1040s) for the last two calendar years; please include complete returns with all schedules filed (State returns are not needed)

☐ All federal K-1s, partnership returns (1065s) and corporate or S-corp. returns (1120s or 1120-Ss) for the last two calendar years (if applicable)

☐ YTD Profit & Loss Statement if you’re self-employed or an independent contractor

Property documents

☐ Leases on all rental properties you may own, if applicable

☐ Mortgage, real estate tax and insurance premium statements for these properties

☐ Most recent mortgage statement (refinance only)

☐ Current year tax statement, if not reflected on mortgage statement (refinance only)

☐ Insurance declaration page (refinance only)

Personal documents

☐ Complete bankruptcy papers, if applicable

☐ Divorce decree and settlement statements, if applicable and only if requested by Underwriting to verify receipt or obligation to pay alimony or child support or to verify the division of assets

Proof of identity

☐ Copy of state-issued driver's license (front and back) or passport showing your date of birth

☐ If not a U.S. citizen: a resident alien card (front and back); resident alien application or H1B or L1 Visa plus passport as applicable

The Gist

In short, make sure you gather all your financial documents and don't make any big financial decisions while starting or during this process. You want your finances to be as stable as possible when applying for a mortgage. Let us know if you need any help gathering documents! Ready to apply? Find a loan officer near you by clicking here.


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