You’ve been working hard to secure good credit and saving to put down 20 percent on the home of your dreams. Now that push comes to shove and it’s time to meet with your mortgage loan originator to put together the financing for that house, he or she is going to ask you for some documents that may seem nonsensical at times, but from a financer’s point of view, all makes sense.
By assessing this information, your mortgage loan originator will be able to determine if you qualify for a loan. If everything is up to par, you'll be on your way to becoming a homeowner. But if you don't meet all the requirements or you don't provide all the necessary documentation, you'll have to wait a little bit longer before packing your belongings and hiring a moving company.
As a result, you may be wondering: What documents do I need to apply for a mortgage?
Here’s a list of the whats and the whys:
W2:
This should be pretty clear-cut. A w2 is the form that shows exactly how much you have been paid per year.
Bank statements:
Your mortgage lender is going to ask for the last two months of bank statements. You must print out every page of the statement. If the file says 16 pages, all 16 pages must be handed over, even if the last one is empty, just to show the complete information to the lender. This shows a short history of what you have in your accounts, the regular withdrawals and deposits, and any potential big financial gifts received. It will go toward painting your financial picture.
Quarterly statements:
You will need to provide the most recent quarterly statements for any investment accounts, often used as “cash reserve,” a buffer of funds you as a homeowner can fall back on in case of emergency.
Paystubs:
Supplying your last two paystubs proves your employment and shows that you have a steady income.
Divorce agreement:
Divorces come with financial obligations, such as alimony and child support. Documents that outline these financial agreements will be necessary as well.
Exiting Debts:
Do you have an existing mortgage? A car loan? Student loans? A business loan? Your lender will need to see the details of any outstanding debt you may have.
These documents, which may seem burdensome to provide as requested, are all necessary for your lender to have a comprehensive picture of the risk they take when providing your mortgage. For the most streamlined process, provide all of the paperwork at the beginning. Remember that getting a mortgage pre-approval is essential, rather than waiting until you find a property you like, because it can speed up the process and it shows sellers that you are a serious buyer.
