Paper Trail: The 19 Documents Required to Buy (or Sell) a Home
By Meaghan Agnew
Before you sign a single page at the closing table, you'll need to have these documents and forms at the ready.
Real estate paperwork can be overwhelming. Simply put, buying or selling a home buries you in printed materials. Some of them are obvious (W2s, bank statements), and some of them are surprising (what's a termite letter anyway?). The key is to start collecting them now — before the time crunch begins.
Below are 19 must-have documents that both buyers and sellers will need in hand during the purchase process on that home for sale in Fort Lauderdale, FL. Note: These are just the most commonly needed documents. Some states require specific certification letters like confirmation of hurricane-grade windows, and in some situations, such as when you're selling to a buyer who's getting a VA loan, you may have to provide additional certifications to secure loan approval. Always, always talk to your real estate agent about the unknowns.
W2s and 1099s
This one is obvious, but you'll want hard-copy proof of your earnings for the previous two tax years. When in doubt, just scan your whole tax return; some mortgage lenders prefer to have your entire return anyway.
Most of the time, your last two pay stubs will suffice, but some banks might ask for up to two years' worth of payment records. If you receive payments via direct deposit, printable versions of your paycheck might take some legwork to track down, so it's best to get on top of this one early.
Are you getting an early inheritance from your parents to help cover your down payment? They'll need to write a gift letter making clear that the money is indeed a gift and not a loan. The letter should be addressed to the mortgage company and include, among other elements, the dollar amount, the address of the property you hope to purchase, and the date the funds were transferred.
Proof of any debts
Credit card statements, student loan statements, car loan statements, child support agreements ... you need records of them all. Honesty is key here; "forgetting" to include debts can put your loan approval and closing in jeopardy.
As a buyer, you'll need to offer bank statements as part of your lender's due diligence procedures. They'll look to confirm that your money is "seasoned" (essentially confirming that any financial transfers were completed legally) as a requirement of the USA Patriot Act.
Records of additional assets
This one is less traumatizing. You'll need to gather proof of any other assets, such as mutual fund statements and documents relating to any other real estate or property you own.
Copy of your driver's license
You'll actually need this twice: once during the initial mortgage application process and once at closing. The seller also needs to bring a copy to the closing.
Copy of preapproval letter
Once you start shopping around for a piece of real estate, you'll want to prove your buying power. The preapproval letter details your loan type and amount you've been approved for, plus your interest rate. It's like carrying around your buying résumé.
Purchase & sale (P&S) agreement
The P&S is a legally binding contract, not merely a pinkie-swear promise. As such, you should have your real estate attorney carefully review its terms before you sign it, then be sure to keep it handy as you begin the next stage of the buying process.
It's not unusual to tack on some hard-copy changes to the original P&S, most often involving either the purchase price or the repairs that the seller has agreed to make to the property.
Proof of insurance
At closing, some lenders require proof of home insurance from the buyer, including hazard or flood insurance. Even after you secure the insurance itself, you'll likely need printed copies of the policies.
Two common examples? A termite letter (proof of a clean inspection) and a locate or decommission letter confirming the details of any buried oil tanks on the property. In either case, the responsibility to perform these inspections and provide the resulting certification letters is negotiable. Regardless of who pays, however, lenders frequently to require proof that necessary remediation or containment steps have been made before a sale will close.
Proof of payoffs
Owe money to a plumber, contractor, or another bank for your home equity loan? At closing, a seller will need documentation proving that all debts have been settled.
Lead paint letter
Was your home built before 1978? Then federal law requires you to disclose any lead paint hazards in the dwelling and to give any existing reports to a potential buyer.
Home warranties aren't required during all transactions, but sometimes a buyer will request that the seller provide a policy with a one-year guarantee that ensures the efficacy of the home's systems and appliances. (Good deal for the new buyer!)
Unloading a condo? At some point during the selling process, potential buyers will most likely want to peruse the rules of the condo association; if they're savvy, they might also want to read the minutes of recent association meetings.
Property lines are often surprising; even if you've lived in a home for eons, you might be shocked to discover that a sliver of your driveway doesn't technically belong to you. Before selling your place, you'll want to pull up the survey document to assure the buyer that the presumed land is theirs. Lenders may also require that the buyer have a new survey done before the sale can close.
Property tax receipts
Here's another one that can easily slip through the cracks, but as a seller, you'll also need receipts for any property taxes paid in the last couple of weeks. This is a potential point of concern for some home sales, as sometimes the full property tax payments have not been made for the year by the time of the sale — leaving the buyer and seller to negotiate the details of the remaining payments. Currently owed condo or HOA fees are also frequently negotiated in the same way.
Power of attorney
It's rare that a seller will physically show up at a closing, in which case they need printed proof they've turned all negotiating powers over to that attorney in the suit.