Most lenders require borrowers to complete a loan application and provide information demonstrating their credit-worthiness – for example, their income, assets and employment. “Documentation” means providing documents that support the information provided in an application — like W-2s, tax returns and bank statements.
Most lenders require borrowers to complete a loan application and provide information demonstrating their credit-worthiness – for example, their income, assets and employment. “Documentation” means providing documents that support the information provided in an application — like W-2s, tax returns and bank statements.
When applying for a mortgage, applicants should have their documentation assembled when they apply for their home loans. That includes but is not limited to statements from bank, investment and retirement accounts, award letters for pensions, pay stubs and W-2s (if salaried), tax returns, business licenses and year-to-date balance sheets and income statements (if self-employed).
Often, mortgages are underwritten electronically, using an automated underwriting system (AUS). The software generates a decision and a list of underwriting conditions. That list tells loan officers and mortgage applicants what documents they need to supply before they can close on their home loan.
When you request a loan, you will be required to submit a great deal of important paperwork. Providing all of the necessary documentation can be tedious, but it does serve a purpose. Lenders want to examine your finances in order to determine if you should be lent to and if you can afford to repay a loan. Lenders will also look at this documentation to determine how much to lend to you and at what interest rate.
Regardless of the size of the loan, you will be expected to submit at least some basic documentation. That is why it is a good idea to be prepared and organized, so you can know what to expect, rather than having to scramble to find documents at the last minute. If you haven’t already, set up a filing system so that you know where to locate all of your important financial documents. That way, everything you need will be accessible before you even shop around for loans.
Lenders want your financial information from many different sources before they lend to you. Here are some of the documents a lender may require:
This could include tax returns and other forms including W2s or 1099s.
Your income helps determine how much money lenders will lend to you. Keep your pay stubs and file them in chronological order so you can submit your most recent information.
Lenders want to know how much you owe so they can determine how much to lend to you. If your debt is high, you may be a riskier prospect for a lender. The result may be a lower limit or higher interest rate. Lenders also want to know that you repay your debts and that you repay them on time.
Lenders will probably want to know how much you save and how much you spend each month so they can determine if and how much to lend to you.
You should also be prepared to submit information about assets and liabilities and titles, depending on the kind of loan you are requesting. Your lender should provide you with a comprehensive list of documentation and if you have any questions or need clarification, don’t hesitate to ask.
