Before any loan approval process can be carried out completely, you will at some point have to supply your lender with documentation proving your ability to pay back the loan in a timely manor. Once the lender receives your documents the loan officer will begin the process of analyzing your income to credit so he or she can deliver back to you an option of loan choices that you were pre-approved under. Those choices could vary anywhere from no income proof, no appraisal or no appraisal fee, no proof of funds, to zero closing cost. Those decisions are all based on risk and credit, so try and be as detailed as possible when you speak to a loan office for the first time. After the pre-qualification process the prospective buyer or homeowner refinancing will be asked to supply hard documents supporting income, assets, insurance coverage etc.
Keep this list handy as it will serve as a good reference of documents that most lenders will require. Ask your lender to see if they allow faxing in your documents versus mailing them. Most lenders prefer the method of faxing as it will clearly increase your loan approval processing time and allow you to close quicker.
- A purchase contract for the house you wish to buy (if you have one)
- Your bank account statements or any assets in the form of checking and savings, 401k, stocks and bonds for the previous 2-3 months
- Your very last 2 pay stubs, W2 forms or tax returns for the past two years prior.
- Divorce settlement papers, if applicable
- Credit card bills for any accounts paid off in full in the last 30 days or statements on account in which you want paid off if you are doing a refinance / consolidation loan.
- Information on other consumer debt such as car loans, furniture loans, student loans and retail credit cards
- Profit and Loss statements year to date along with 2 years tax returns, if you are self-employed.
- Any gift letters, if you are using a gift from a parent or relative or other organization to help pay the down payment and/or closing costs. This would only pertain to in most cases a purchase loan.
- If a gift is received, a letter will be needed to simply state that the money is in fact a gift and will not have to be repaid from the grantor.
We strongly advise applicants to have these items on hand when they visit a mortgage company as it will help speed up the mortgage application process. In some cases an application fee and or appraisal fee will have to be paid when you submit the mortgage application. This fee is generally paid once you have successfully negotiated on a home or have chosen a loan program that meets the terms and agreement you a comfortable with. Most lenders will never charge you a free to pre-qualification. During the front end process be sure to ask your lender as many questions as possible. We say this because once you start the process a fee may be required upfront and if you didn’t ask the proper questions, your money could be forfeited without a refund.