What Documents Are Needed When Applying for a Mortgage?
Before mortgage lenders approve your loan, they will need to verify your identity, income, debts and assets. This process serves to safeguard both your financial interests as well as those of the lender. Furthermore, it demonstrates that you are an established borrower able to afford monthly payments on your new home.
ID for Noncitizens
In order to verify your identity, lenders typically require a government-issued ID such as a driver’s license or passport. These documents are usually easy to acquire and can be carried with you at all times, making them accessible for lender review at any time.
Your Social Security number and proof of citizenship are necessary to prove you’re eligible for a mortgage. Furthermore, the lender will review your credit report and score to identify any discrepancies that could prevent you from being approved for a loan.
You may be asked for copies of both your current and previous pay stubs, as well as statements for any supplemental income sources like commissions or overtime. These documents give the lender an accurate picture of your current earnings and allow them to determine your income level – an essential step in getting approved.
Lenders typically request your most recent bank statements for at least the past two months in order to better assess your spending patterns and identify large deposits or purchases that require further documentation, such as gifts or miscellaneous purchases. They also use this information to identify any large deposits or purchases for which additional documentation may be necessary, like gifts or miscellaneous purchases.
Tax Returns and W-2 Forms
Your tax returns are essential documents for mortgage lenders to review, as they provide details about your income and taxes paid. They help them decide how much you should borrow and will likely be the first piece of paperwork they request when reviewing your application.
Mark Zihmer, vice president of mortgage lending at CrossCountry Mortgage, states that self-employed individuals must submit tax returns from the last two years in order to determine their net worth and whether or not they qualify for a mortgage. With this information, they can assess whether your finances are stable enough for you to obtain such financing.
Other essential income documents lenders will look at include retirement award letters and other documents that verify your source of income. Furthermore, they’ll check bank account statements to see if there have been any significant changes in finances over the past year, such as a large cash deposit or loss in income.
Lenders typically request asset statements which outline your ownership and any investments, such as 401ks and IRAs. This gives them an indication of your net worth and helps determine how much they might be able to recoup in case of default.
In addition to these standard documents, your lender may also require you to sign a lender certification and authorization form which certifies that the information provided is true and complete. This document is particularly important for applicants who are co-borrowers or whose loans are secured by another person such as a spouse.