Apr 3, 2019 What Documents Do You Need to Apply for a Mortgage?

When applying for a home loan, there are several factors that are measured to predict your success as a mortgage holder. Each factor of income, credit and assets have their own criteria and rating scale. What’s important to know is that, like making a cake, each layer is important and has its own special ingredients. Let’s review these now.

Verifying Employment and Financial Income

Your employment history for the past two years as well as the type and amount of income you earn all play an important part in the home loan qualification process.  We will ask you questions related to your employment history and your earnings.  Clarification of any recent gaps in employment history or changes in earnings might be needed.  We will need supporting documentation so we will be asking for:

Pay stubs. You’ll need your two most recent pay stubs.

W-2 Forms. Be sure to get copies of your W-2s from the past two years.

Self-Employment. If you’re self-employed, either as a sole proprietor or as partner of a partnership or S-corp., you will need to provide a year-to-date profit/loss statement, and copies of your last two years of filed tax returns (personal and business)

Other sources of income. If you’re an independent contractor, we’ll need copies of any 1099 forms you received and copies of your filed tax returns for the past two years. If you are retired, we will need a copy of your Awards Letter or Pension Statement. If you have any additional sources of income that you would like considered for the loan application, such as alimony or child support, let us know so we can discuss with you the required documentation.

Verifying Your Assets

An important part of the transaction when purchasing a home is the amount of down payment and the source of these funds.  Some refinance transactions require cash reserves. As part of the loan process, we are going to need some supporting documentation. Be ready to provide:

Bank Statements:  We will need to have copies of your bank statements from the last two months.  Be sure to include all pages.

Gift Funds: If you are receiving a gift to assist you with your down payment, we will need a completed and signed gift letter along with supporting documentation depending on your loan type and the source of the gift being provided.

Retirement/Other assets: If you need to draw from a retirement account or other sources for reserves or a down payment, documenting the withdrawal and receipt of the funds requires specific steps. Each asset type has its own documentation procedures to follow.

Analyzing Your Credit

When applying for a home loan, lenders consider your credit history.  Your ability to manage debt is measured by how much debt you presently have, how much debt has been paid off and, how many on time payments you have made over time.  Your credit score is a vital component in the application process. A word of caution: Mortgage lenders use a different credit score rating than the consumer loan scores available from credit bureaus.

Upon review of your credit history we might need to see:

  • Letters of explanation addressing recent credit inquiries for any new debt.
  • Copy of your student loan statement to verify the monthly payment requirement.
  • Documentation related to any bankruptcies, liens or public records located on the credit report.

Putting All Your Documents Together

Once we have all your information and supporting documents, we will thoroughly review the application information provided to ensure it meets underwriting requirements.  If any questions arise (and they usually do), we will contact you to discuss and address. Once we know we meet all the requirements, we will issue your pre-approval letter.  If you are shopping for a home to buy, we highly recommended that this letter be submitted with your offer. If you are refinancing, you can rest assured knowing that your financing is on the way to you.

Call PMG Home Loans to discuss these topics and financing options.  We are your local lender.

PMG will work with you to balance your homebuying goals...

...against your financial circumstances, and help you identify the mortgage loan that best meets your needs.