If you’re applying for a mortgage, you’ll have to get your ducks in a row. In this case, the ducks are documents — lots of documents!
Mortgage lenders want to make sure that you’re a good candidate to acquire a home loan. To determine that, they’ll need proof of employment, income, credit score, and the disclosure of any debt, amongst other things.
It goes without saying, when you start the lengthy mortgage process, it’s best to be prepared! The right documents and accurate personal information can help you acquire the best interest rates and move the whole process along faster.
So get your folders and paperclips ready. Here are all the documents you need for a mortgage application.
For a mortgage lender to give you a mortgage, or even a loan estimate, they need to verify you are … well … you!
A copy of your driver’s license is a piece of ID that will help them verify your identity, address, and residency. If you do not have a driver’s license, a lender may accept a copy of your passport or another type of official proof of residency like a state-issued ID card.
Social security card
Most social insurance cards don’t see the light of day very often, so hopefully you remember where you put it. A lender will need to pull a credit report to start your mortgage application. A copy of your social security card provides the information needed to pull credit history and confirm debt (like credit card debt and student loans).
Proof of employment
To complete a mortgage loan application, you need to prove you are employed and your income is steady. Providing copies of pay stubs and W-2 forms will suffice.
Typically a lender will require copies of your last two years of tax returns. This provides proof of employment, income, debt, liabilities, and an abundance of other information. This also can serve as verification that you do not have any unpaid taxes.
List of debt
Part of the application process is providing a list of all your debt, including the name of the debtor, account numbers, amount owed, and monthly payments. This helps the lender determine your income-to-debt ratio and your overall financial situation.
Bank statements are required as yet another form of proof of income and assets. They can be used to verify you have enough for your mortgage down payment in your bank accounts. And it also shows if your debts are being paid.
Form 1099 or self-employment verification
If you work as a contractor or are self-employed, you will need to provide additional information showing proof of income and employment. This can be verified by a Form 1099.
Alimony and child support
If you receive alimony or child support, you will have to show proof of this income. However, you only need to do this if you rely on it to pay your bills. Otherwise, you do not have to include it as income or an asset.
If you have significant assets, like cars, properties, etc., you will need to provide documentation showing ownership.
The potential documentation you could be asked for is not limited to this list. As the mortgage application process chugs along, you may be asked for a wide variety of other documentation. For example, if you rent you may be asked to show rent receipts for the past year. If you are married or have been divorced, you may have to provide your marriage certificate or divorce decree.
Many documents are needed for a mortgage application, and while it may seem tedious, it is to ensure your loan is processed and approved as accurately and quickly as possible. Being prepared and having everything ready will save you time in the long run.