When you apply for a home loan you will need to have a number of mortgage documents in order to close. These mortgage documents verify a number of facts about your life, from your income to your debts and beyond.
The list can seem very daunting to new mortgage seekers, but it doesn’t have to be if you’re prepared.
This mortgage loan documents checklist will help prepared you with the correct mortgage documents to ensure your mortgage application goes smoothly.
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Mortgage Loan Documents Checklist – 14 Documents you need when you apply for a mortgage loan
- W2’s from current and past employers
- Pay check stubs
- Bank Statements
- Last 2 years tax returns
- Gift letter (if using gift funds)
- List of your debts
- List of all your assets
- Proof of timely rental payments
- Credit Report
- Profit and loss statements
- Signed sales agreement
- Proof of additional income
- Divorcee decree (if applies)
- Bankruptcy paperwork (if applies)
1. W-2’s from Current and Past Employers
Your mortgage lender will likely require your most recent W-2’s from all current employers for each applicant. However, some lenders may even require W-2’s from the past two years. If new W-2’s become available during the loan application process, your lender may require those to be produced as well.
Contact your employer if you don’t have a copy of your W2’s. If you still are not able to get your W-2’s you still need to produce them to your lender. The IRS does allow you to order copies of documents you have submitted along with a copy of your tax return. For additional information on obtaining documents from the IRS visit: https://www.irs.gov/uac/newsroom/how-you-can-get-prior-year-tax-information-from-the-irs.
2. Pay stubs
Most lenders have a requirement that you produce 30 days of paystubs for each applicant. Because many employers now provide electronic pay statements, you may be able to print the necessary documents online. If your current paystub is not representative of your typical earnings (maybe due to sick time, vacation, or an altered schedule). You should be sure to produce additional months’ paystubs to show the lender your normal take home pay amount.
3. Bank Statements
The lender will need to see recent bank statements. Typically, 3-6 months of your most recent bank statements will be needed to verify income and assets. If you are making the down payment yourself you will need to show where that money came from and have proof the money was not borrowed.
4. Gift Letter for the down payment (if needed)
If your lender allows you to use a gift for part or all of your down payment, you may be asked to provide proof of the origin of the gift and of the fact that it is indeed a gift and not a loan. If you received the gift from family or friends. They may be asked for a copy of their bank statement or a statement from the account they provided the gift from. The person giving the down payment gift will also need to provide a gift letter stating they’re not expecting repayment.
5. Tax Returns
Count on being required to produce full versions of your most recent federal tax return. These returns will be examined closely. Ensure that your tax returns are accurate and reflect your actual income and deductions.
Your lender will also want to obtain your tax transcript and may require you to sign the IRS Form 4506-T. That for gives the lender permission to obtain the transcript directly from the IRS so that it can be compared to your tax return. If you are not up to date on filing your taxes, you will need need to file them before you can apply for a loan.
6. Debt Lists
In addition to providing income about your income, your lender will want to see a full listing of your debts. This aids the lender in determining your debt-to-income ratio, which factors heavily into lenders’ decisions.
7. Asset Lists
Your lender will likely request bank statements for your checking and savings accounts to verify your down payment source and the value of the accounts. Along with those statements, you will also need to provide a list of your assets so the lender knows you are financially sound and will remain in a good financial position after paying both the down payment and the closing costs associated with the requested mortgage.
8. Cancelled Rent Checks or Mortgage Checks
If you are renting a home now, your lender may ask to see cancelled checks or proof from your landlord that your rent has consistently been paid on time. If you are a homeowner rather than a renter, the lender may request statements from your bank or current lender that shows you have consistently paid your existing mortgage. On-time payments, especially for your current housing arrangements, are an important consideration for most lenders and are given a lot of weight in lending decisions.
9. Profit and Loss Statements
For self-employed individuals, in lieu of producing W-2’s, you will likely need to produce a profit-and-loss statement for the current year.
10. Credit Report
While the lender will not ask you to produce your own copy of your credit report, the lender will pull your credit reports, so it is best to know what they contain. Pull copies of your credit reports from each of the major bureaus and ensure any errors are corrected.
If you have unpaid collections or multiple late or missed payments. You may wish to delay your mortgage application while you spend some time cleaning up your credit. Credit reports are the most important factor a lender uses when making lending decisions and providing the mortgage rate.
If your credit score is lower than the lender requires, or is borderline. You should check out these tips on improving your credit score quickly. Even if you have been pre-approved for a mortgage loan. You can still work on improving your credit score while you are searching for a home. Once you have started the loan process do not do anything credit wise.
11. Signed Sales Contract
The lender will need a copy of the home sale contract to verify the purchase amount and potentially some of the terms.
12. Proof of Additional Income
If you have any additional income that you want your lender to take into consideration when making a lending decision. You will need to produce proof of that income.
If you have rental income from a home or farm. Copies of the lease agreement or monthly payments will be sufficient for current year investments. However for older investments, it should be reflected on your tax returns.
For alimony or child support, a copy of the court order may be necessary. You will need proof in the form of your bank statements or copies of cancelled checks showing the payments are regularly made and you may have to provide proof of your child’s age.
13. Divorce Decree
You will need to produce a divorce decree if you have been married in the past. Sometimes even years after a divorce has been finalized, the lender will still need the decree. This document will typically reveal to a lender if there are relevant child support or alimony obligations.
14. Bankruptcy Documents
If you have been through bankruptcy, the lender may wish to see proof that certain debts have been discharged through bankruptcy and are no longer outstanding. The lender needs to ensure that you are no longer legally obligated to pay those debts in order to fully understand your financial position.
Keep in mind that this mortgage loan documents checklist is not exhaustive. Depending on your personal situation and your lender, you may be asked to produce more or less documents than those that appear above.
Any time your lender requests documents, try to respond quickly and produce all of the requested documents. If you fail to do so, you will slow down the approval process.
If you’re having difficulty finding or producing documents for some reason. Communicate with your lender to see if other documents may provide them with the information that is needed.
It is always best to being the mortgage process by getting a mortgage pre-approval, a pre-approval letter will require certain preliminary loan documents that will help speed up the loan process once you have an expected offer.
As time passes, if you receive new documents relevant to your application. Give the previously-produced documents to ensure your lender has all the information necessary to get you approved.
It’s best to go through this mortgage loan documents checklist and have everything ready before applying.
This will make the mortgage process less stressful and you will be on the road to purchasing your new home without all the headaches.
Randall has over 15 years of experience in the mortgage and credit industries. He spends a chunk of time helping consumers understand their credit, advise them on how to increase their credit, and lending his mortgage expertise to help them find the right type of loan. Randall lives in Dallas, Texas with his two sons.