Mortgage document checklist
|Most Lenders take full advantage of an automated underwriting system that allows them to request as little information as possible to verify the data you provided during your loan application. Gone are the days when it was necessary to verify every piece of data collected during the application. The automated underwriting system compares your financial situation with statistical data from millions of other homeowners and uses that comparison to determine the level of verification needed. In many cases, a single W-2 or pay stub can be used to verify your income or a single bank statement can be used to verify the assets needed to close your loan.|
|In order to fully assist you, your lender is going to need to reference some important documents. You might want to start with your W-2 forms and federal tax returns for the past 2 years, year-to-date pay stubs, documentation of additional income, investment records, debt/creditor records and cancelled mortgage/rent checks.|
|Listed below are some documents that may be required during the mortgage application process (some loan programs may require additional information). To get the ball rolling and make the entire application process much smoother, you can get a jump start on organizing them before you speak with your mortgage professional. Remember to make a copy of everything, and keep the original documents in a safe place.|
|In order to verify your employment, your lender may require the names, addresses and telephone numbers of all your employers for the last two years. If you are self-employed, your business records and tax returns for the last three years may be requested.|
|Your W-2 form is sent from your employer and used to file your income taxes. Generally, you will need to produce your W-2s for the past two years.|
|Pay Stubs and Additional Income|
|It is important to save your pay stubs, for at least a 30-day period before your mortgage application. Documentation of additional income information, such as Social Security, pension, interest or dividends, rental income, child support, alimony, and self-employment income may also be requested.|
|Federal Income Tax Returns :|
|If you are self-employed, or more than 25% of your income comes from commission, overtime or bonuses, you may need to provide complete copies of federal income tax returns you filed for the two most recent years. In some cases, you may be required to provide 2 years of business tax returns and a year to date profit & loss statement.|
|You may need to provide statements from all of your accounts (checking, savings, mutual funds, money markets, certificates of deposits, 401k or other retirement accounts) for the last two months to verify the funds available for your down payment.|
|Be prepared to provide the account numbers, current balances and the minimum monthly payments of all credit accounts, such as loans, credit cards, child support and other payments you make each month.|
|You will need to provide a copy of your homeowner’s insurance declaration page for the subject property in refinance transactions. If you own multiple properties, it may be necessary to provide insurance statements for each property that you own. For purchase transactions, you will need to purchase a new policy and provide the lender with verification of coverage.|
|Property Tax Bills|
|If you own multiple properties, you may need to provide property tax bills for each property so that the lender may accurately assess your total monthly obligations.|
|You can borrow funds to use as your down payment! However, any loans that you take out must be secured by an asset that you own. If you own something of value that you could borrow funds against such as a car or another home, it's a perfectly acceptable source of funds. If you are planning on obtaining a loan, make sure to include the details of this loan in the Expenses section of the application. Further, make sure you provide documentation of the note (i.e. copy note including monthly payment)|
|Pension or Social Security Income :|
| If part or all of your income is derived from your pension plan or Social Security, you may be required to provide recent pension check stubs, or bank statement if your pension or retirement income is deposited directly in your bank account. Sometimes it will also be necessary to verify that this income will continue for at least three years since some pension or retirement plans do not provide income for life. This can usually be verified with a copy of your award letter. If you don't have an award letter, the lender can contact the source of this income directly for verification.
If you're receiving tax-free income, such as social security earnings in some cases, the lender will consider the fact that taxes will not be deducted from this income when reviewing your request.
|Non Reported Income|
| Generally, only income that is reported on your tax return can be considered when applying for a mortgage. Unless, of course, the income is legally tax-free and isn't required to be reported.
Some lenders may offer a stated income program, which means that you can be qualified for a loan based on the income you state rather than that which can be verified. Usually these programs require larger down payments and offer interest rates that are substantially higher than regular mortgage rates.
| If you own rental properties, the lender will generally ask for the most recent year's federal tax return to verify your rental income. They will review the Schedule E of the tax return to verify your rental income, after all expenses except depreciation. Since depreciation is only a paper loss, it won't be counted against your rental income.
If you haven't owned the rental property for a complete tax year, the lender may ask for a copy of any leases you've executed and we'll estimate the expenses of ownership.
|Dividend and/or Interest Income|
|Generally, two years personal tax returns are required to verify the amount of your dividend and/or interest income so that an average of the amounts you receive can be calculated. In addition, the lender will need to verify your ownership of the assets that generate the income using copies of statements from your financial institution, brokerage statements, stock certificates or Promissory Notes. Typically, income from dividends and/or interest must be expected to continue for at least three years to be considered for repayment.|
|Child support, Alimony or Separate Maintenance Income|
|Information about child support, alimony, or separate maintenance income does not need to be provided unless you wish to have it considered for repaying this mortgage loan. If you need this income to be considered, expect to provide copies of checks, divorce decree, and/or court documents verifying the child support and/or alimony income.|