Once you've found your perfect home, presenting an attractive sales offer includes a letter showing your prequalifications as a buyer. If you have a structured settlement, you aren't required to disclose that income to a mortgage lender, but the payments might help you in qualifying for a home loan. Structured settlement holders include people receiving court-ordered damages on a regular schedule, such as those from pharmaceutical company settlements and other product liability awards. Insurance company payments for client wrongdoing and other personal injury settlement payments, including workers' compensation, also qualify as income under structured settlements.
Order a copy of your credit reports from the three main reporting agencies -- Equifax, TransUnion and Experian -- using the online service at annualcreditreport.com. Follow the directions on the credit reports to correct any errors you find on the documents.
Collect any income and bank statements, copies of your tax returns for the last two years and statements for any personal savings or retirement accounts. If you have regular payments as part of divorce or child custody agreement and want this income considered for your loan, collect the documents showing your monthly income from these sources. Lenders typically require a copy of the benefits statement listing the total amount of the awarded income, if available, the amount of the payments and the payment duration. Locate your last two bank statements showing you received the stated amount in your personal bank account.
Collect documents and statements from your structured settlement. These include the legal paperwork outlining the judgment resulting in the structured settlement noting the amount of the settlement and the duration of the payments. Locate your bank statements for the last two months to show you've received the payments in your personal accounts. Bank statements for the last two months provide a receipt of your settlement payments.
Select a qualified-private lender, mortgage loan broker or commercial direct lender to provide a loan for your prospective new home. Research the potential lender's qualifications, certifications and loan packages available to determine the best match for your personal needs. Let your potential lender know that your qualification package includes a structured settlement as part of your loan qualifications.
Meet with your mortgage lender, bank or loan broker to review your financial documents and receive prequalification for a mortgage loan. Lenders typically view structured settlements as guaranteed monthly income and examine the original court documents and your financial records, including your bank account statements, to determine the reliability of the payments.
Request the administrator of your structured settlement complete and sign any required information paperwork, if required by your lender.
Return the required your loan application and paperwork to your lender or loan broker, along with any formal letter or settlement document copies requested by your lender.
Obtain the official prequalification approval letter from your lender.
Submit an accepted purchase agreement for your new home to your lender for mortgage approval.
Items you will need
- Bank statements
- Structured settlement paperwork
- Cornell University Law School Legal Information Institute: Structured Settlement Factoring Transactions
- Ginnie Mae: Getting Pre-Approval
- Ginnie Mae: Choosing the Right Lender
- Wells Fargo: What Lenders Look at
- Wells Fargo: Check Your Credit Report
- Federal Trade Commission: Free Annual Credit Reports
- Federal Deposit Insurance Corporation: The Three Major Credit Bureaus
- Realtor.com: How to Get a Mortgage
- MakingHomeAffordable.gov: Proof of Income Checklist
- Quicken Loans: Income and Asset Verification During Home Loan Process
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