Applying for a Mortgage: Do the Paperwork Ahead of Time

The process of applying for a mortgage, finding a home, and closing the deal can be a very stressful time, which is filled with a great deal of paperwork. Often, the process begins with you providing the lender an outline of your available funds and your salary. They will initially use these numbers to get an idea of how much of mortgage to offer you and the value of this mortgage. While initially they may only require your word, the mortgage lender will ultimately require proof of your employment and a number of other financial details, so it is a good idea to prepare as much of this information ahead of time as possible.

One of the most tedious parts of purchasing a new home is doing all the paperwork, but by spending some time getting your financial records in order before visiting a mortgage lender, you can greatly simplify the process of getting a mortgage and greatly reduce your stress.

Below, you will find some of the information that is usually required by a bank or other mortgage lender in order to approve your loan.

• Financial Records – This includes your W2s, bank statements, pay checks, and any other financial data that you want the bank to use to determine the value of the mortgage to offer. While not always required, it is a good idea to have at least your two most recent years tax information handy.
• Proof of Other Income – Many banks will allow other sources of income to be used when considering offering a loan. Other sources of income include unemployment, disability, bonuses, pensions, stock options, book or media royalties, Social Security or child support, Typically they will require proof that you will receive these types of income for at least 3 years, but you will be required to provide accurate documentation of these funds.
• Self Employment – For the self employed, it is often much harder to show income and some lenders will require a 3 year history of your business. You will need 1099’s and invoices to verify your employment and it is a good idea to speak with an accountant or tax specialists to determine how to more accurately document your employment.
• Commission Based Employees – Lenders will sometimes only consider an employees base salary or might not consider the complete commission, because this can vary month by month.
• Debt History – Your bank will need to know how much you currently owe and your outstanding debt.
• How the Property will be Used – The bank or lender will need to know what you intend to use the property for. For those who intend to use it as a rental property, a more detailed plan might be needed than those who intend to use it as their primary residence.
• Inventory of Other Valuable Assets – Your mortgage lender will require proof of expensive or valuable collectibles or other items of value in order to consider it as part of your net worth.
• Proof of Down payment – Whether it be from saved funds, a family member, or a community program, the lender will require proof that you can afford the down payment.
• Personal Information – This includes your given name, current address, phone number, and social security number.

By having the above information ready before begin visiting lenders, you can make the entire mortgage approval process much simpler and quicker.