~ About Financing a Home or Land ~

The good news: Good lenders are still making loans to good borrowers. Money is available. There are still some low or zero down payment programs. VHA, USDA and FHA are still options.

The bad news: The lender you have used before may not work for you next time. It is more important than ever to make sure your lender is still lending before you make an offer on land or a home.

Rich or not-so-rich, when making an offer you will have a better chance if you provide the seller either proof of funds or a pre-approval letter. Even if you intend to pay mostly cash, having this information in hand can make the difference between your offer and someone else's in the eyes of the seller. In the case of foreclosure sales, the seller (a bank) will require one of these documents to accompany your offer. Without it your offer will be rejected outright.

Though borrowers with steady employment (or retirement income) and high credit scores can get financing, self-employed borrowers will have a tougher time regardless of credit scores. It was this way back in the 1980s; it is nothing new. You will need several years of tax returns and patience to explain to lenders why you are as as good a risk as a corporate employee. Two or three is a minimum; more is better.

If this is your first time building, please note that not all residential lenders will finance land, but there are lender who will. Be prepared to make a down payment of up to 30%.

What you will need for a mortgage: *

• W-2 forms — or business tax return forms if you're self-employed — for the last two or three years for every person signing the loan.
• Copies of at least one pay stub for each person signing the loan.
• Account numbers of all your credit cards and the amounts for any outstanding balances.
• Copies of two to four months of bank or credit union statements for both checking and savings accounts.
• Lender, loan number, and amount owed on other installment loans, such as student loans and car loans.
• Addresses where you've lived for the last five to seven years, with names of landlords if appropriate.
• Copies of brokerage account statements for two to four months, as well as a list of any other major assets of value, such as a boat, RV, or stocks or bonds not held in a brokerage account.
• Copies of your most recent 401(k) or other retirement account statement.
• Documentation to verify additional income, such as child support or a pension.
• Copies of personal tax forms for the last two to three years.