Providing all the required paperwork and documents when applying for a mortgage may be one of the top anxiety-inducing processes of your financial life.
Just remember that countless homebuyers before you have survived the ordeal, and you can make it easier on yourself if you know what to expect.
“It is very common for a mortgage lender to request that you provide certain employment and financial documents when applying for a mortgage,” said Samantha Reeves, senior mortgage homebuying writer for Veterans United Home Loans. “These common documents include the most recent two years of tax returns with all attachments, such as W-2s and 1099s; your most recent bank statement for all accounts; your most recent 30 days pay stubs; and identification documentation.”
In addition to these documents, you may be asked to provide other records specific to your situation.
“For example, if you own a business you may need to provide business tax returns and profit-and-loss statements,” she said. “If you receive retirement or disability [payments], you may need to provide evidence of its continuation and receipt.”
A good way to prepare for the process is to assemble a checklist of everything you’ll need. Jeffrey M. Sutton, a mortgage loan officer at George Mason Mortgage in Virginia, provides the following checklist to his clients:
Mortgage Application Checklist
• A copy of your most recent pay stubs covering a 30-day period.
• A copy of your last two years of W-2 tax returns.
• Proof of any additional income needed to qualify.
• Copies of most recent two months asset account statements on all accounts including
checking, savings, mutual funds, stocks, bonds, 401k, TSP and/or IRA accounts. Please
provide all pages for each statement.
• Name, address and phone number of landlord(s) for past two years.
• Divorce decree, separation agreement, and property settlement agreement, if applicable.
• If investment properties owned, past two year’s complete Federal Tax Returns (include
all schedules) and a current one-year lease for each investment property owned. Please be
sure that page two of the tax returns is signed.
• Ratified sales contract, if available.
• If permanent resident alien, please provide copy of green card.
• Copy of Driver’s License.
Additional information required for self employed or commissioned borrowers:
• Past two year’s complete federal individual tax returns with all schedules, W-2s and 1099s.
Please also provide corporate, S-Corp, or partnership returns, if applicable.
• Year-to-date Profit and Loss Statement and Balance Sheet dated to within the most recent 90-day period.
• Copy of current Business License.
Additional information required if applying for a VA loan.
• Original Green Certificate of Eligibility.
• Copy of DD 214 OR Statement of Service from your commanding officer (stating rank,
position and that you are in good standing).
Additional information required when refinancing an existing
• Copy of Recorded Deed of Trust, and HUD-1 Settlement Statement
• Copy of Property Survey and Title Insurance Policy
• Copy of existing Hazard Insurance Policy (Homeowners Insurance)
Organize, Assemble and Deliver
After you have accumulated your paperwork, follow this advice from the experts:
- Organize and make it easy to access — “One key tip for success when applying for a mortgage is to keep all of your financial and employment documentation organized and easily accessible,” Reeves said. “You will save a lot of time searching and stressing over the location of documents while being under contract on a home. Get everything together in advance. You will thank yourself later.”
- Don’t leave anything out — Borrowers need to tell their mortgage person everything, said Leighton Johnson, branch manager and senior originator at Silverton Mortgage Specialists. “It’s not like buying a car, where the salesman is trying to sell them the least amount of car for the most payment. The mortgage person is trying to help them get the most house for the least payment, and they need all the information upfront. Most issues can be resolved easier if we know about them at application.”
- No “blackouts” – “Don’t black out any numbers either on the tax returns or on the bank statements,” advised Linda Fleischmann, a mortgage consultant at Stress Free Mortgage. “If you do, you’ll have to resend it without the blackouts later.”
- No state income tax returns – Don’t bother with the state portion of your income tax returns. “The lenders don’t need them and shred them,” Fleischmann said.
Know What You Can Pay
Before you file your mortgage application, make sure you have a mortgage figure in mind that will allow you to sleep at night.
“Select a dollar amount that stays within your mortgage payment limits,” said financial adviser Chris Hogan. “Banks are notorious for pre-approving amounts higher than you originally applied for. However, you’re the one who will be making the payments, not the bank. So stand firm.”
Hogan also advised that mortgage borrowers get their credit report from TransUnion, Experian and Equifax.
“Scour the report, and make sure there are no surprises or inaccuracies,” Hogan said.
You can also get a free annual credit report at AnnualCreditReport.com.
By Brian O’Connell of Realtor.com. To view the original article, click here.