Prepare Your Documents for Mortgage Application

You have done the difficult part of your home buying process which is selection of your home and negotiating the price. You have entered into a Sale agreement and it’s now time to apply for a mortgage loan. Over the years, the mortgage application process has been simplified and made much more borrower friendly in terms of the documents required to be submitted. The number of documents required for processing of a mortgage loan has reduced but yet many people are extremely wary of this process and consider this as a big hassle. A little amount of attention to documents required and keeping the document ready and handy goes a long way in simplifying the process. Majority of the documents required by the lender are related to the lender’s decision making process of assessing his credit risk and the borrower’s credit worthiness. Take a look at a few critical documents that are required for mortgage loan approval

Proof of Stay – Along with a document indicating your current residence, you will also have to certify the month and year since when you have staying at your current place. A tenant would have to organize such a certificate from his landlord.

Ta Returns and with Pay Stubs – You would have to submit the tax returns of the past two years for the lender to assess your income. The lenders would typically draw up a statement which would compute your income and the monthly expenditure based on the personal details. This helps the bank in determining the amount of loan that you can service on a monthly basis. You need to submit your monthly pay slips for the last three months to confirm your employment status and the organization you work for.

Bank Statement – Furnish your bank statement for the immediate preceding three months which would confirm the credit of your salary as mentioned in your pay stub and give details of any other loan outstanding to the lender

Sales Contract – Submit the sale agreement finalized with the seller for the lender to ascertain the price of the property and the closing date. The amount of loan finalized and disbursed to you would depend on the purchase price stated in the agreement.

Credit Score Statement – Make sure the credit score statement that you submit to the lender is free from any errors. Banks lay a great importance on the credit score reported by the agencies to evaluate your credit rating. Make sure you start working on improving your credit score from the day you decide to start looking out for a home.

It would be a good idea to scan and organsie these documents in your notebook. You could also allow the lender to directly access documents from your bank or send them electronically to the lender if they permit this. Submitting the necessary documents is vital to your application being processed and hence it is always better to get organized when it comes to managing documents required for mortgage loan.