Required Documents for a Mortgage

Anyone who has purchased a home knows it’s a little like getting a financial enema. Loan Officers have to ask a lot of intrusive personal questions and dig deep into your finances. Meanwhile, you have to provide a lot of documentation and with some of it, you might be wondering why?

For example, when we were refinancing our home Aaron asked me to write a letter stating that I had no ownership stake in a property my parents owned in Massachusetts. This seemed an odd request considering the home had been purchased in 1973 when I was two and had never changed hands.

Initially, I argued with Aaron. Why would I have to state that I didn’t own my parents home? Aaron pointed out that house had popped up on my credit report, probably because my father and I share a similar name, and that we had to address it.

So I wrote a snarky letter that pointed out the absurdity of having to write such a letter and called into question the accuracy of a credit reporting process that resulted in inaccurate information.

After we had a good laugh I rewrote the letter without the snarkiness and we proceeded.

But here’s the thing, without the letter there is really no way to know if I had a financial stake in the home or not. This is true of many situations and is the reason you might be asked to provide additional documents or letters explaining seemingly innocuous situations.

Take a divorce decree. Have you ever met someone who said they were divorced and then you found out they were still technically married? Marriage in many states comes with financial obligations and it could have serious ramifications for the lender if they approve a person for a mortgage and then find out later that person has a whole set of other financial obligations the lender was unaware of.

Without the divorce decree, the lender doesn’t know for certain that you are divorced. It doesn’t matter if it was one year ago or ten years ago.

I understand this now but at the time I was probably like most of you, wondering what the…

A mortgage is a big financial commitment and it is a risk for the lender. It is the job of the Loan Officer (with your help) to try to present to the lender the most complete picture of your financial situation as possible. It might feel intrusive to be asked these questions and to provide all this documentation but it is necessary to create that complete picture. Incomplete or inaccurate information only leads to more scrutiny.

You do not want more scrutiny.

Please keep this in mind when we ask you for more information, additional documentation or letters of explanation.

Also keep in mind that if you provide documents to get pre-qualified but don’t find a home and make an offer for 3-4 months you’ll probably have to submit a lot of those documents again, pay stubs, bank statements, etc…

Yes, you provided them once but a lot can change in 3-4 months. Heck, a lot can change in a couple days and all the documentation needs to be up to date.

Here’s a list of the most common documents you will have to provide. Keep in mind not every document is necessary for every loan. For example, we can skip pay stubs, w2s, and bank statements for some qualified borrowers. And you might be asked to provide something that isn’t listed here, it will all depend on your personal financial situation.

Most commonly required documents:

• Most recent 30 days paystubs / most recent 3 paystubs
• Previous 2 years W2’s / 1099’s / K1’s
• Previous 2 months bank statements for all checking and savings accounts (all pages including blanks)
• Most recent mortgage statement (for each mortgage)
• Homeowners insurance and property tax information (for all properties owned)
• Homeowners Association statements (for all properties owned)

Required in some cases:

• Previous 2 years Federal Tax Returns (all pages and schedules)
• Previous 2 years Business Tax Returns (all pages and schedules)
• Proof of Retirement Income – 1 month (if applicable)
• Previous 2 months or quarterly investment & retirement account statements
• Terms under which funds can be withdrawn from retirement accounts (if applicable)
• Social Security award letters (if applicable)
• Complete divorce decrees & child support documents
• Rental agreements for all rental properties owned (if applicable)

For more information contact Aaron Walker or Jay Rapson at Aaron Lending, LLC.