Posted by Stateline Funding Corp.
Many times borrowers that are doing a refinance or home purchase don’t realize all the documentation that is needed when applying for a loan. It’s not that the mortgage broker wants to irritate you to see if you know where you social security card is located, or if have your tax returns on hand and in order. These items are crucial and required for all home loans. In fact, most home loans could be completed much faster if all the documentation is provided in a timely manner when requested.
The idea behind this blog post today, is to share valuable information to borrowers about how to create the perfect loan file. We share an article by Mark Greene with our clients when we process their loan because it perfectly explains why so much documentation is needed to process a loan.
What things can you expect a mortgage broker to ask you for?
- Most recent one month of pay stubs
- Most recent 2 years of W2’s
- Most recent 2 years of tax returns
- Most recent 2 months bank statements for ALL your bank accounts
- Your driver’s license and social security card
These are the items needed for a basic loan approval. More complicated files depending on the borrower’s history have to include:
- Divorce decrees
- Child support documentation
- Self-employed borrowers need profit & loss statements
- Real Estate owned documentation
The list can go on and on depending on each borrower’s credit profile and history, but this is just to give you an idea of what is necessary.
Why is all this documentation needed?
Well, the lender is giving you a hefty loan and they need to be 100% sure that you are a person that will pay the loan back on time. They need to make sure you have the assets on hand and make enough income to support the payment.
Mark Greene makes a perfect statement stating, “If the lender asks for a specific document, give them exactly what they are asking for, not what “should be OK,” – because it won’t be.”
We couldn’t have said it better ourselves. This is so true in this industry. Lenders are very specific about what they request, and won’t approve your loan until you provide exactly what they asked for.
This isn’t to intimidate you in purchasing or refinancing a home, it’s meant to prepare you. Work with your mortgage consultant and loan processor and provide the documentation they request. If you aren’t sure what something is, it’s better to ASK than to ASSUME; it will help you from doing things twice. Hoping this information will prepare you and give you a better understanding of what documentation is needed when applying for a loan.