6 Must Have Documents For A Mortgage
So, you’re in the market to purchase a home. Whether this will be your first home purchase or this is one of many you have purchased, you still have a list of requirements from your lender. Unless of course, you are purchasing with cash.
Lenders are like the cynical grandmother. They want proof for everything. If your credit score is as good as it gets and you have tons of money in the bank, you are still going to be required to provide a plethora of information to your lender.
To make the process much smoother and less stressful for you the buyer, here are a few of the “Must Have” documents you will need to get your financing processed for your new mortgage.
Getting a mortgage without documenting where your income comes from is a thing of the past. History shows that borrowers who do not or can not prove their income sources are those who are most likely to default on their mortgage.
1. Last Two Years Tax Returns
Your lender is not going to simply take you at your word that you made a million dollars last year. They want hard, documented proof that you make what you claim you make. This is to ensure that you can afford to pay your mortgage amount every month and avoid going in default for your loan. The longer you can establish a stable and adequate salary history, the more confident your lender is to release funds on your behalf. Thus the reason for at least two years of your Federal Income Tax returns and W2 forms are required.
If your income has recently changed, your lender may require additional documentation to support and justify the change in salary.
2. Pay Check Stubs
In addition to your last two years of income tax returns and W2 forms, your lender is going to require that you provide a history of your pay check stubs to validate your current income. They want to know what your income has been for the last couple of years, but they also want to know what your current income is to show you can afford your mortgage.
3. Other Income
Not everyone works in a job that provides pay stubs. Some people are self employed or have another source of income, then you may be asked to provide documentation to support. Banks statements, letters from the source of income and 1099 forms usually suffice for that type of documentation.
4. Letter from Employers
You may be asked to provide a letter directly from your employer verifying income, hire date and position. This is a normal request form most lenders. The letter must come directly from your employer to the lender. You can not be the “middle man”. So, make sure up front that your company’s HR department is capable and willing to do this for you.
5. Proof of Funds
Once your lender has adequate information from you that not only can you afford to purchase the home and have enough income to maintain that home and the mortgage, they may require a “proof of funds” letter from your banking institution or investment firm to show that you are poised to pay closing costs and your down payment, while still having enough funds to handle a “life emergency”. If you received a “gift” from a family member for closing costs or the down payment, be prepared to ask that family member to write a letter stating that they have “gifted” you the money and do not require you to pay it back.
6. Photo ID
As silly as this may sound, if you are planning on getting a mortgage for a home, be prepared to have a government issued photo identification to provide to your lender.
I realize that not every one drives, and therefore does not own a drivers license. However, a state or government issued id card, passport or military identification will suffice.
You lender wants to verify that the person applying for the mortgage is the person they are lending funds to.
Each lender has their own set of requirements and policies regarding documentation and requirements. These documents and items we have discussed here is very typical of all lenders.
If you have any questions or concerns, contact your Buyer’s Agent to guide you through the process with your lender. If you do not have an agent to assist you, we are always available to help!