Applying for (and obtaining) a mortgage can be intimidating and commonly thought of as a complex process, but it doesn’t have to be! The best place to begin is to speak to a mortgage professional that can walk you through all of the steps.
That said, getting approved for a home loan will typically require validation of your income, assets, and credit history. Getting ahead on gathering this information can help to alleviate stress and save time.
Below are some examples of typical items you will want to keep on hand.
Your mortgage company will want to show you can afford the monthly mortgage payment so you may need to provide:
- Pay stubs
- W-2 forms
- Many mortgage companies will also ask for your tax returns for the past two years, if you earn commission, to see the big picture of your earnings and to show income stability.
- If you have any additional forms of income or regular payments you’ll have to show specific documentation highlighting these items. For example, social security income or child support/alimony payments.
- A social security income letter can obtained online at the Social Security website.
- A child support court order and documentation of receipt, etc. can also be used.
- If you’re self- employed, the mortgage company will want to see your tax returns for the past two years. This allows them to verify that your income has been steady.
- If you own rental property, your mortgage company will also request the past two years’ worth of tax returns to view a record of profit and loss. The good news is that income from a rental property can help when it comes to obtaining a mortgage and securing the best loan terms.
In many cases, you’ll need to have cash set aside for a down payment on your new home. There are many down payment options even for people who do not have a lot of cash at their disposal.
The following documents are can be used to source where your down payment is coming from:
- Bank statements – In most cases, you’ll need to provide the last two months of savings, checking and investment account statements.
- Settlement statement – If using funds from a previous property sale to fund your down payment, you’ll need to provide this statement.
- Stocks and investments – You’ll need to show the past two months of account statements.
- Sale of assets – For any other assets sold, you will need to provide a proof of ownership, proof of sale and/or proof of funds transferred to you.
One of the biggest considerations in the mortgage application process is your credit and payment history. Ultimately the mortgage company will want to validate that you have a history of making on-time payments.
Your credit report will play a huge part, but additional documentation, such as canceled rent or mortgage checks, bankruptcy discharge paperwork or proof of paid collections or judgments may be necessary.
In some cases, the standard documents may not paint the complete picture needed for loan approval. In these situations it may be necessary to provide additional detail. One example may be an explanation of a credit report discrepancy.
An experienced mortgage professional can help to explain the needed documentation and guide you through the process. Speak with one of our Mortgage Loan Originators today
and they will be happy to answer any questions you may have.
- By Bill Goldberg,
Jun 19, 2018
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