Time flies, and here we are in March already, halfway to June. We mention June because the “experts” think May or June will be the earliest that the U.S. Federal Reserve may reduce short-term rates. Brokers know that last week rates declined somewhat as disappointing factory data and a decline in consumer sentiment solidified expectations for interest rate cuts from the Federal Reserve by this summer. Market participants slightly increased their rate cut expectations following the economic data. Remember, with a slow economy comes lower rates; a fast-paced economy or inflationary environment are marked by higher rates.

But Orion’s brokers know that rates are only part of the situation with which borrowers are confronted. One of the most important things when discussing the home financing process with potential borrowers is identifying upfront the documentation that will be required from them. Lenders and investors need to make sure that the borrower’s financial situation is sound, and that they have the ability to repay the loan.

The most common documents borrowers may need to provide to obtain a home loan include W-2 forms from their employer for one or two years, pay stubs to cover a month of employment and at least the last two months bank statements.

In addition, brokers know that any large or unusual deposits will need to be sourced and verified. Other important items include tax returns and self-employed borrowers, or borrowers who have a side business or own a rental property, will need at least two years of both personal and business tax returns. A passport or driver’s license will also need to be provided, as well as proof of legal U.S. residency if your borrower is not an American citizen. For military borrowers wishing to obtain financing from the VA, they will need their DD 214 form and Certificate or Release or Discharge from Active Duty.

Manyfirst-time homebuyers may also receive gift funds to help them purchase a home, which will need to be documented as a gift letter to include information about the donor’s relationship to the borrower, the amount of the gift, the date, and the purpose. The donor may also need to prove that he or she can afford the gift through bank statements. If your borrower is going to use alimony or child support as part of their funds to qualify for a home loan, they will need their divorce settlement, proof that their ex is paying regularly and verification that the payments will continue. For first time homebuyers, they will need to show proof they’ve paid rent on time as well.

As one can see, borrowers are best served by an experienced broker during what can be avery confusing process! And Orion’s AEs are here to help.

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