If you’re applying for a mortgage, you need to be ready for the in-depth approval and income verification process. Lenders have to accurately assess the ability of borrowers to be able to pay back any loan. This means carefully looking over documents such as tax forms, income verification, bank statements, and credit reports. Although the exact forms you need will vary depending on your specific loan, the following is a list of what the typical lender will be looking for.
Pre-Approval Process vs. Approval Process Documents for Loan Approval
When you go through a pre-approval process, your lender looks at information to see what you qualify for. Information can include income, credit score, employment history, etc. This will tell you the maximum loan size you qualify for and the interest rates that go along with it. For the pre-approval process, you still need to bring your lender certain documents, many of which are the same as the ones you’ll need for the full application.
Once you’re pre-approved for a loan, you don’t necessarily have to apply for that specific one. Choose the loan that fits your specific needs. Take into consideration interest rates, loan length, and monthly payments.
Have the following documents prepared before you begin the pre-approval and full approval loan process. With these, you will have an easier time navigating your mortgage journey.
Supporting Documents for Loan Approval
Complete Loan Application
If you find the right loan for you after the pre-approval process, you’ll need to fill out a complete application. Some of these loan applications can be done online, with the supporting documents attached or scanned in. Other times, these applications will need to be handed directly to your lender.
Identification Documents for Loan Approval
Official identification like the following will prove your identification during the process:
- driver’s license
- state-issued I.D. card
- military I.D
Income-Verifying Tax Forms
You’ll need to provide tax forms that verify your income. This can be your W2, 1040, or 1099 form if you have any additional income from a separate source. Bring at least two years’ worth of these forms in order for your lender to get an idea of your steady income and employment. If you’re self-employed or a contract worker, expect to provide documents that prove you’ve been steadily receiving income, such as two years of income tax returns.
To show that you’re currently employed and therefore receiving steady, livable income that you can use to pay back the loan, bring two to three months’ worth of pay stubs.
[Related: How to Get Your Mortgage Approved (and Keep it That Way)]
Bring your bank statements from the last two to three months so that you can assure your lender that you have sufficient funds in your accounts to cover the loan down payment.
If you have any economic resources (or assets) that are adding to your net worth, such as cars, investments, or properties, you’ll need to provide proof in the form of asset statements.
Although you personally don’t have to provide your lender with your credit report, you do need to give permission for them to run a credit check through a credit report system. This will allow them to see if you have a good payment history or any delinquent accounts, and calculate your debt-to-income ratio (DTI).
[Related: Think You Know How to Find Your Credit Score? Think Again]
If you currently rent your home, you’ll need to provide your lender with rental history and contact information for your current landlord to show that you have made payments on time and are in good standing.
All of these documents are essential to provide your lender a clear and detailed picture of your financial history, and will inform them on your ability to pay your mortgage on time and in full in the future. Gather these supporting documents for loan approval and you’ll be sure to move swiftly through the loan application process.
Questions About Documents for Loan Approval? Contact Seattle Mortgage Planners
Questions about applying for a mortgage or refinancing your current mortgage? Contact Seattle Mortgage Planners or schedule a call with us today.
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