In this guide, we will cover the Documents Required For Mortgage Process. Are you trying to apply for a mortgage? If so, you must start prepping all the necessary documents to help the lender verify your identity and financial life. Before you are given a mortgage, you must meet all the underwriting requirements. The mortgage processor is in charge of making sure all the documents required for the mortgage underwriter is legible with no missing pages so the file does not get kicked back. The processor will make sure there are no credit disputes and all required docs are labeled and in order. The mortgage underwriter expects the file to be complete with no missing documents so he or she will establish whether or not you qualify for the mortgage loan program you have applied and will be able to afford the payments.
The mortgage underwriter will review the documents required to underwrite the loan such as W2s, bank statements, tax returns, divorce decree, bankruptcy documents, real estate contract, letter of explanation, and other important data and docs and issue a conditional loan approval. If any pages are missing or not legible, the underwriter will place the file in suspense and kick it back to the mortgage processor. This will delay the loan process since the file is now back in line to get re-reviewed.
The documents required that will be expected from you can substantiate different aspects of your income and employment, assets and debts, credit history, identity, and more. So it’s many documents, and it might take over a month to gather all of them. It is vital to start collecting them in advance. But what exact documents do you need to gather? The documents required from you may vary with the type of mortgage you are looking for and the lender. So, in this guide, we will give you a list of all the supporting documents standard in mortgage applications. We will categorize the documents based on what the lenders seek to verify.
Documents Required To Start Mortgage Application
Before we get to the documents required, you must first apply for the mortgage by completing a standardized form referred to as the Uniform Residential Loan Application or the the 1003 mortgage loan application. Before you submit your documents required, you must complete this form. The 1003 is a four page mortgage loan application used by all lender and asks for personal and financial details.
The uniform residential loan application or the 1003 mortgage loan application is a four page questionnaire the borrower completes during the mortgage loan application process. Page 4 of the 1003 will ask the borrower about if they filed prior bankruptcy, foreclosure, has judgment, lawsuit, and other pertinent information that is important for the mortgage process. All public records not on the credit report should be disclosed because it will be discovered during the third-party national public records search.
Page 4 of the 1003 is a borrower disclosure form that must be answered truthfully with regard of prior credit and financial information. The lenders use the information in this form to determine your eligibility for the mortgage. Once approved, the lender will ask you to support your application with specific documents. Now, that’s where the documents we are going to discuss below come in.
Documents Required To Verify Qualified Income and Assets
The lender will request documents to help establish your ability to repay the loan. They will zero in on your past and current job situation. Lenders will want to know how long you have been working and whether you have been working for the same employer the whole time.
The loan officer and mortgage loan processor will work with you to help you collect the documents required to process your mortgage loan. Do not worry if you do not have it. The mortgage processor and loan officer will guide you step by step and help you recover missing documents required to proceed with the mortgage loan process.
You will need to substantiate all this information with documents. Some of which you will have to get from the employers themselves. The mortgage processor will do a verification of employment to verify your wages, overtime income, and bonus income. Borrowers who are applying for a no-income documentation loan should not provide income tax returns.
List of Documents Required By Mortgage Processor To Start The Mortgage Process
Every documents required does not apply to all borrowers. It is a case by case basis on the types of documents required. For example, if a borrower did not have a divorce, a divorce decree will not apply to them. If a borrower did not file bankruptcy, bankruptcy paperwork will not apply. In this guide, we will list a general list of documents required so do not hesitate to contact us if you have any questions. Now, with that said, here are some of the papers your lender will want to see to verify your income and assets:
- W-2 forms for the past two years
- Recent pay stubs: Past 30 days
- For self-employed individuals, you must provide year-to-date profit and loss statements and documents showing unpaid accounts receivable.
- Two years of income tax returns including all schedules (W2 income only and no income verification borrowers do not need to provide tax returns)
- For 1099 borrowers, they will need to provide 1099 forms for the past two years.
- Past 60 days of bank statements showing funds to be used for the down payment and closing costs.
- It can be checking or savings account.
- 401k statement or investment account statement if you are using funds in these accounts for the down payment, closing costs, or reserves.
- Copy of front and back of your drivers license and social security card.
- Copy of executed home purchase real estate contract.
- Copy of homeowners insurance declaration page when available.
- Copy of canceled earnest money check.
- If you have a prior divorce, a copy of divorce decree is required: Alimony, child support documentation will be required if applicable.
- If you filed bankruptcy, provide bankruptcy discharge paperwork.
- If you have non-occupant co-borrowers or co-borrower, we will need the same documentation from all co-borrowers.
There will be more documents required throughout the mortgage process. The above documents required will get the mortgage process started. The mortgage processor will proceed with ordering verification of employment, ordering home appraisal, coordinate title work with title company, and other back office duties to keep the loan process moving.
Documents Required To Analyze Expenses and Debts
Other than your income, the lender will also want to know and understand your financial liabilities or expenses. The lender wants to establish whether, after all your bills are paid, the amount you are left with each month is enough to cover mortgage payments. So, you will be asked to list all your debts, expenses, or any other payment you make every month. Additional documents required could include alimony or child support.
The mortgage underwriter may want to verify your debts listed on your credit report to make sure all credit tradelines are accurate. With that said, here are the documents that might be required from you when applying for the mortgage;
- The creditor’s name, account type, number, unpaid balance, and monthly payments made on all your liabilities, including credit cards, student loans, auto loans, personal loans, medical bills, and any other liabilities for which you are responsible.
- When it comes to alimony or child support, you need to provide any paperwork that documents any payments made such as canceled checks or bank statements.
- You will also need proof of any monthly job-related expenses if it affects your gross income needed to qualify for a mortgage, if applicable.
Other Miscellaneous Documents Required
Even though what mortgage lenders care about the most is a borrower’s financial health, some may still want to verify a few other crucial details. These are more details the lender would want to find out, and they would expedite the entire process. So here are some of the documents you will likely need:
- A copy of your driver’s license
- A copy of your Social Security card
- Your immigration paperwork, if you are a foreigner
- If applicable, your rental history, which the contact details will back for your previous landlords
- If you are already a property owner, you must provide proof of address, property value, property status, intended occupancy, and the monthly expenses that come with the property.
- You must also provide that information to the lender if you have another outstanding mortgage.
- You need to provide the other lender’s name and account number, the type of mortgage, the amount paid every month, the remaining unpaid balance, and, when applicable, your credit limit.
What Happens If There Are Errors on Credit Report During Mortgage Process?
When it comes to credit verification, you do not need to provide your credit reports, as the lender will pull them from their system themselves. But that doesn’t mean that you should completely ignore your credit reports. On the contrary, you should check them before submitting your application to know beforehand what the lender will find out from their side. You can get these reports from any of the credit bureaus.
If there is a discrepancy on the actual data of your credit tradelines and what reports on your credit report, the lender can do a rapid rescore to correct the misinformation in three to five business day. Rapid rescores are paid by the lender and does not cost the borrower any money.
By checking beforehand, you will have a clue about any roadblock that may be in your way, including; high account balances, bankruptcy declarations, and past-due accounts. Some lenders would ask you to provide a letter of explanation, which allows you to explain and give reasons on key areas the lender picked up, not just on issues with your credit report but also your entire application.
Mortgage Process During Chapter 13 Bankruptcy on FHA and VA Loans
The team at FHA Bad Credit Lenders are experts in helping borrowers during Chapter 13 Bankruptcy on FHA or VA loans. You are eligible to qualify for an FHA or VA loan one year after filing Chapter 13 Bankruptcy. You do not have to have your Chapter 13 Bankruptcy discharged. This is for both purchase and refinance transactions. We will guide you step by step on getting bankruptcy trustee approval and make sure you have a smooth mortgage process during Chapter 13 Bankruptcy repayment plans.
FHA Bad Credit Lenders are experts helping borrowers get an FHA or VA loan approval during Chapter 13 Bankruptcy repayment plan with a manual underwrite. We will guide you from beginning until you close. The steps to qualify and close your home loan during the Chapter 13 Bankruptcy repayment plan is very smooth and streamlined.
Remember, if you had declared bankruptcy in the past, you need to follow the rules laid out depending on the type of mortgage you are applying for. There are some mortgages you will have to spend a specific amount of time from the date you were cleared to be eligible. However, there are others where you won’t have to wait. You can use this letter to set the record straight on issues that would otherwise hinder a successful application.
How To Avoid Stress During Mortgage Process and Close on Time
As we conclude, applying for a mortgage is no easy task – as it can be time-consuming and quite complex. But you know what can make it easier? Having all the necessary documents on time helps streamline the process and increases your chances of getting approved. As we mentioned earlier, the documents you will require largely depend on the lender and the type of mortgage you are applying for.
Anytime during the document gathering process you have any questions, please contact us at FHA Bad Credit Lenders at 262-716-8151 or text us for a faster response. The team at FHA Bad Credit Lenders are available seven days a week, evenings, weekends, and during holidays. Or email us at gcho@gustancho.com.
When you select a lender, you need to thoroughly review the documentation requirements and then gather all the documents required well in advance for a smoother process. It will demonstrate to the lender that you are a responsible, committed, and prepared borrower, which may work in your favor sometimes. You can also seek help from a mortgage broker who will guide you in gathering all these documents.
