Gone are the days when you just need to fill out a mortgage application and your lender just need to pull your credit score to get the underwriting process completed. Now, the lenders prefer long-term stability to short-term gains. No lender is willing to take the risks, leading to a more stringent requirement of documents that you need to submit as part of a mortgage application.
Your loan officer or mortgage broker will be the ultimate source to know exactly what paperwork you need to complete. Depending on your profession and the stage of your loan application, your requirements may vary, but they generally fall under the same groups. You may want to use a document checklist to ensure you have everything to begin your home hunting.
The documents you may be asked to submit can be put under the following groups.
Proof of Income
If you are employed, you need paycheck stubs for the past 30 days to show your monthly income. If you get paid weekly or biweekly, you must submit as many pay stubs as is necessary to equal one month’s income. Remember, your pay stubs must not be more than a month old at the time of submission.
Self-employed borrowers or those working on commissions need to submit duly signed tax returns for the last two years. Some lenders may ask a profit-and-loss statement as well if you run a business and have not yet filed the previous year’s tax return.
Assets and Liabilities
You lender needs information about your assets and liabilities, which simply mean how much you have in your bank accounts and what your long-term debts are. You usually need three months of statements for all your accounts, which include checking, savings and investments accounts. You must copy all pages of your statements, including the front and back of every page.
You must declare all your liabilities, including debt liabilities, such as car loans and student loans. If you are a renter, you are usually required to supply information about your rent payouts and whether they were paid on time in the past one year.
Borrowers who work in a company must submit W-2 forms for the past two years. If you wonder where to get this document, you should be able to find it attached to your tax return. You may also ask your employer as W-2 is given by the employer every year so that employees can do taxes.
Self-employed borrowers must submit tax returns for the past two years. You must do a double check to ensure that all your returns have your signature. A copy of the past returns can be requested by filling out Form 4506, which is available with the IRS.
If you are applying to get pre-approved or have not yet found out a home that you can buy, you may leave blank the section of your application where you need to supply property details. However, the final approval is contingent on this vital information.
You need to contact your lender as soon as your purchase offer is accepted. You must provide the sales contract properly signed by you and the seller. Moreover, your lender will also need a home appraisal report, and probably a proof of homeowners insurance.
Your lender may ask you to provide your photo ID and that of a co-borrower, if there is any. If somebody has offered you money for down payment in the form of a gift, you must provide a proof of the same. Typically, the lender asks you to provide a gift letter from the donor stating the amount gifted and a declaration that you do not need to pay back the amount.