The mortgage application process is rather complex. There are a number of documents you will have to fill out and other things you will need to provide the lending institution during the whole process.
Here are some of the most common documents that are needed to apply for a mortgage, but please be sure to check with your lending institution as they may or may not have their own specific documents they require.
Proof of income:
Whether this is done by paycheck statements or W2 forms, you will need to provide documentation of your income. For those who are self-employed, your bank may ask for a complete profit and loss statement for the previous year.
Some banks require more than one year of W2s, so be sure to have your tax returns handy, and if you are applying near the end of the year, you may have to provide the new W2 once it arrives. If you have any rental properties, you will need to be sure to provide proper documents on those. Typically they will be the documents you provide with your tax returns.
Some unusual sources of income can include spousal or child support if you consider them to be income.
Your lending institution may ask for any bank statement or investment reports within the last 30 -90 days, unless you are borrowing from your primary bank which would already have those documents. In addition to your W2s, you will need to submit a complete tax return from the most recent year.
There is a document you’ll be given, IRS Form 4506-T, that will give the lender permission to contact the IRS and get a copy of your return to ensure that your copy matches. A discrepancy can raise all kinds of red flags at your lending institution.
Interestingly, if you receive a gift from a relative that is to be used as your down payment, or at least part of it, you will need to show that it is indeed a gift and will not need to be paid back. You may need some documentation provided by the gift giver to include in your application. Check with your lending institution to see what they will require.
Anyone getting a loan backed by the FHA will be subject to tighter restrictions than they would have been in the past. If you have been renting previously, you will want to show that you have made your rent payments on time for the last year. Cancelled checks are a great way to do this because they will be stamped on the back with the date each month.
If you have had a bankruptcy in the past, you may be asked to provide documentation of the discharge of the bankruptcy. Sometimes if you are in the process of clearing negative information off your credit report, you will have to bring in documentation that supports your stance. It’s not as easy as being able to just run a credit check any more.
If you are asked to bring in a document, be sure you do so when they ask for it so they have time to review it. Also, if your document is a multi-page one, provide the bank all of the pages, if for no other reason than to provide the right context. And lastly, keep everything current. If the loan application process takes a few months, refresh the paystub information or other documents that have expired.