Whether you are buying a new home, refinancing an existing home or consolidating debt, a clear understanding of your personal financial situation is an important first step.

The best way to have a clear idea of what you can afford is by looking at your income, your expenses and your debt.

Verification of income is necessary when you apply for a loan. Be prepared to bring the lender at least two paycheck stubs and your most recent W-2. If you are self-employed, you are usually required to have a copy of the last two years of your tax returns.

Copies of your bank statements, dividends and investment portfolio, alimony & child support statements may also be needed to verify income.