How to Get Mortgage Loan Paperwork Right the First Time
There is no getting around the paperwork involved in applying for a mortgage loan.
Mortgage lending qualifications have tightened in a post-recession world—meaning whether you’re applying for a government-backed loan, a qualified mortgage loan or even a jumbo loan, you’ll face more paperwork than ever before.
Fail to turn in some of the required documents, and you could get turned down.
Your lender may require more or less, but here are the general guidelines to help you prepare.
Show How You’ll Use the Mortgage Loan
Before a lender will approve your mortgage loan, they need to know what you’re borrowing the money for and how you’ll manage the expenses that come with the property. You might need to show this information:
- Information about the property in question
- Your purpose in getting the loan
- Present and proposed housing expenses
- Copy of contract if it is a purchase
- Copy of current mortgage statement if refinancing
Much of this information is a matter of public record, and both your REALTOR® (Heidi Buchberger RE/MAX Realty Center) and your lender can help you gather what you need.
Personal Information
In addition to verifying why you’re asking for a mortgage loan, a lender will also verify you are who you say you are. This means providing a personal identification documents such as the following:
- Often two forms of government identification, such as a passport and driver’s license
- Social Security number
- Copy of divorce decree if you are divorced
- Legal status, legal problems or other financial obligations that would not appear on the credit report
Income and Assets
Your lender will want to know about your income and assets. Presenting a complete picture of your net worth can increase your chances of getting approved for a loan. Start gathering the documentation below.
Income verification:
- Proof of income for each borrower on application—two years of W2 forms or paystubs, if you are a wage earner
- Two years of tax returns (with all schedules)
- Year-to-date profit and loss statement if you are self-employed
- Documents about other possible sources of income such as child support, Social Security or alimony
Assets:
- Proof of assets for each borrower on application — two or three months of bank statements for all assets, with all pages of the statement
- Explanations of any bank accounts opened in the last six months
- Letter of explanation and a source for any money given to you as a gift
Credit, Borrowing History and Debt
If you’re shopping for a qualified mortgage, you’ll face tight income-to-debt ratio requirements. Under the Dodd-Frank Act, a borrower can have no more than a 43% debt-to-income ratio, and lenders are required to verify your income—and check your credit to make sure you qualify under these terms.
Be prepared to supply a lot of this information about your borrowing history and debts:
- Credit report disclosure form—a document allowing the lender to pull a copies of your credit reports and credit scores
- Information about bankruptcies—including a copy of petition and discharge, a written explanation of what happened to cause the bankruptcy, and how your situation has changed
- Information on any other properties owned and what current debts you hold
- Letter from your current or previous landlord showing positive rental history
Keep in mind, whenever you send anything to a lender, it is important to present it in an easy-to-understand way. Be as brief as you can in your explanations.
Also, your paperwork must present a complete picture, one that cannot be open to misunderstandings by an overworked underwriter on the other side.
If you approach the mortgage loan application process the right way, you will be more apt to provide the lender what they need, making it a smooth process.
