If you’re applying for a mortgage, the best way to create a smoother and quicker transaction is to have all your documents prepared. Staying organized with documents and finances will make it easier for the lender to move you through each stage of the process, and create an established, trusting relationship.
Below, we’ll discuss the home loan documents you’ll need to have prepared, and why lenders need to have them.
Tax documents provide mortgage lenders with a high level overview of your financial situation. They typically want to see one or two years worth of tax returns, because they want to know that your annual income has been consistent. If lenders see large fluctuations in income, it might plant the seed that you won’t be able to consistently pay off payments.
In addition to your tax returns, lenders may ask to see pay stubs for the last month or two. Your tax returns provide the high level overview, but the pay stubs are the best representation of your recent/current earnings. If you’re self-employed or have other sources of income, prepare your 1099 forms, direct deposits, or other forms of proof.
Lenders want to see bank statements and asset information because it helps assess risk. This could include things like investments and life insurance. They want to make sure you have a few months worth of savings for mortgage payments in your account should an emergency situation happen. Lenders want to see that your down payment has been in your account for a few months — not that it showed up in your account overnight.
This is arguably the most important information you’ll provide a lender. Your credit history must be solid in order to get a mortgage. It shows how quickly you’ve been able to pay off debt, and that can determine how trusting and serious the lender is about giving you the loan.
This is one area that many potential homeowners forget about. If you have friends or family that are helping you pay for the home, that needs to be noted. Otherwise, all these funds coming in could look suspicious. The documentation should list the person’s relationship to you, and the total amount that’s being given.
Your driver’s license, passport, or other form of government-issued ID will be requested often. Simply, it’s just to ensure you are who you say you are. With the amount of scam buyers over the years, lenders need to be thorough.
If you’re a first time home buyer and have been renting previously, you might be asked to provide canceled rent checks that your landlord has cashed. They may even ask your landlord to provide that documentation. Renting history is particularly important if you don’t have a long credit history.
As we stated in the beginning, make sure these documents are gathered well in advance of going after the loan. That way when a lender asks for specific home loan documents, you’ll be able to access them and produce them quickly. You wouldn’t want to lose out on your dream home because you couldn’t get the paperwork in order!
Looking for a mortgage lender in Maryland? Ken Venick has you covered! With over 35 years of industry knowledge, you’ll be hard pressed to find someone as dedicated and knowledgeable as Ken. Contact us today!
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