Applying for a home mortgage loan can be an involved and lengthy process. It makes sense, though, considering that you’re asking a financial institution to lend you tens (or often, hundreds) of thousands of dollars in one lump sum.
Before approving you for what may be the biggest loan you ever borrow, a mortgage lender will want to do their due diligence. They will request a lot of documentation regarding your personal finances, as well as the house you're buying, throughout the mortgage underwriting process.
Here are some of the most common documents you’ll need when applying for a mortgage, how to get them, and why they’re necessary in the first place.
Before a lender is willing even to consider your application, they want to know that you are who you say you are. This means providing them with some sort of personal identification, such as your driver's license, passport, or other documentation. This can usually be emailed or uploaded directly to your lender’s online platform.
If you are a permanent resident, you can purchase a home in the U.S. with a mortgage loan. Once you find a willing lender, expect to provide them with a copy of your green card, Social Security number, and other documentation showing your legal status in the country.
Lenders will often request a copy of your credit report through one or more of the three credit reporting agencies. This hard pull is conducted directly, so you won’t need to physically give the lender anything but your SSN and permission. (If you're married and your spouse also wants to be on the mortgage their credit score will also be taken into account.)
However, if you have a limited credit history (or none at all), you may need to offer additional documentation to the lender to provide your creditworthiness. For example, you could show a history of other bills such as your monthly utilities or even rent payments.
Lenders want to know that you can repay your mortgage loan on time each and every month, which means verifying your monthly income. Expect to provide the lender with pay stubs from at least two or three previous months.
You may also be able to offer W-2s if pay stubs aren’t available or you just started a new job.
Is this year’s income very different from previous years? Do you have other sources of income to consider? Lenders will usually ask for a copy of your last one or two years of tax returns, which can show how your current income compares.
You may already have paper or PDF versions of your income tax returns saved, which you can scan in and email or upload. If not, though, you can request copies directly from the IRS for a small fee.
Copies of your recent bank statements are often required, usually going back at least two or three months. These statements will show not only how much cash you have on hand, but can also demonstrate your monthly income and outgoing cash flow. If you have a co-applicant or co-borrower for your mortgage, they'll need to show proof of income, too. Your lender might also want to see bank statements to prove that your down payment funds are seasoned and didn’t just recently appear in the account.
You can download copies of your most recent bank statements online, if you don’t already have paper versions available.
Your net worth isn’t just dictated by your monthly paycheck. Lenders may also want to know if you have other assets or debts they should consider during the underwriting process. (This is especially important if you don't have a job.)
For example, you may want to let the lender know if you have investment properties or are working to pay your parents back for a personal loan they gave you. They may also want to know your monthly obligations on certain debts, such as student loans or credit card balances.
How you provide these documents depends on the type of asset or debt it is and what your lender requires.
A home appraisal is almost always required when buying a home with a mortgage, as it tells the lender how much the property is worth and how much equity you’ll have. These appraisals are typically assigned through the lender’s network of trusted providers, though, and will be ordered by your lender directly (even though you’ll usually pay for it!).
If you are refinancing a home and happen to have a recent home appraisal, you can sometimes provide this to the lender and avoid paying for another report.
A home inspection gives you a detailed look at the structure and systems within a home so that you can properly assess its true condition. This inspection often includes the foundation, roof, plumbing and electrical systems, windows, HVAC and more.
Depending on your lender, this inspection may or may not be required. If you do order one, though, your lender may want to take a look at it before approving your loan.
Did someone else give you some of the funds you’ll use toward the down payment or purchase price of your new home? If so, expect that you (and potentially, the gifter) will need to fill out and submit a gift letter.
This letter simply states that the money was given as a gift without expecting repayment. If your parents gave you $50,000 for the down payment on your home, your letter would note when the money was gifted and that you are not required to pay them back.
Both you and the gift-giver will need to sign this letter, which may or may not need to be notarized depending on the lender's requirements and where you live.
In some cases, additional information will pop up on your credit report that will pique the lender’s interest. In this case, a hard inquiry or address form may need to be filled out and submitted.
This form can be used to explain recent inquiries that appear on your credit, why they were pulled, and whether you opened a new account or line of credit at that time. It’s also common if you have a friend, family member, or even former spouse whose information or address shows up on your credit.
Your monthly expenses are an important part of determining whether you can afford a new mortgage payment. For this reason, your lender may want to see a copy of your rental agreement, if you are currently renting a home. This will show them how much you’re obligated to pay each month and how much longer you have on your lease.
If you own your home, the lender may request a copy of your monthly mortgage statement and/or current payoff quote.
Buying a home is an expensive venture, and convincing a lender to give you those funds can take some work. Before approving you for a home mortgage loan, expect a potential lender to request quite a bit of documentation. These documents will help prove not only who you are but that you are creditworthy and can afford the new mortgage loan you’re requesting.
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