More than six million home sales occur every year, and most people that buy homes need mortgages to pay for them.
If buying a home is on your radar for the near future, you’ll probably want to think about applying for a mortgage loan.
A mortgage isn’t something you can get in a single day. It takes work, and your mortgage broker will ask for some documents.
Here is a list of documents needed for a mortgage. If you can gather these now, you’ll be ready when your broker asks you for them.
Proof of Identity
Whenever lenders issue loans, they always verify a person’s identity before issuing them. Lenders do this for all loan types, sizes, and amounts.
For example, if you apply for a payday loan, you can expect the lender to verify your identity, even though you might only borrow $100.
Borrowing money to buy a house is a much bigger deal than borrowing $100 for a couple of weeks. Therefore, you should know that a mortgage broker will ask you for proof of your identity.
The best way to prove your identity is by presenting your driver’s license. The broker might also ask for your social security card and other forms of proof. Every applicant needs these documents for mortgage applications.
The purpose of this request is to ensure that you are really you. Therefore, brokers do this to prevent fraud from occurring.
As you consider the other documents you need for a mortgage broker, you might wonder what to know about the income information they ask you to supply. Income information proves that you can afford to repay the loan.
Here are several forms of income documentation they might ask you for:
The first form of income proof you can offer is your pay stubs. If you receive a regular paycheck from your job, you can gather the last few stubs you received.
Providing these to the broker shows several things. First, it proves that you currently have a job. Secondly, it proves how much you earn, which is vital when financing a home.
If you don’t have pay stubs, you can offer W-2s to the broker. A W-2 statement shows your earnings for an entire year and is a sufficient form of income proof for a mortgage.
Brokers generally ask for your last two tax returns, too. The purpose of this is to prove that you’ve had the same job for the last couple of years. It also demonstrates how much money you made during these years.
Tax returns validate a person’s history of earning money, which is why your broker asks for them.
List of Assets and Debts
If you work with a mortgage broker in San Diego, they will ask you for a list of your assets and debts. Your assets include all the things you own that have value, including cash, property, investments, and vehicles.
Your list of debts must include all the money you owe lenders. For example, your list might include car loan lenders, credit card companies, student loan lenders, and personal loans.
A broker will compare your assets to your debts to see if you have a positive net worth. If you have more debts than assets, you might face some challenges getting a mortgage loan.
Legal Documents for Proof of Certain Things
There are times when brokers need legal documents for proof of certain things. For example, if your credit report shows an unpaid debt from a collection company, they might ask for proof that you paid this bill.
When a person files for bankruptcy, a broker might ask to see their bankruptcy documents. There are waiting periods with bankruptcy cases that borrowers must meet with mortgage loans.
The same is true for a person who went through a foreclosure. After going through a foreclosure, a person must wait for a specific timeframe before applying for a loan.
Brokers might also need legal documents for people who experienced a divorce or those who received an inheritance. Your broker can explain what they’ll need in your situation when you meet with them.
Credit Score Consent
A mortgage broker will also ask for your consent to check your credit. When you finance a home in California, the broker must ensure that you meet the credit score requirements for the mortgage.
When you initially talk to a broker, they might ask you about your credit score. While you can tell them what you think your score is, they must verify it.
Therefore, the broker will ask you to sign a consent form that gives them the legal right to check your credit report.
Proof of Payments
Some people who want to buy homes with mortgages might not have a lot of credit. If you don’t have any credit yet, a broker might still be able to find you a mortgage loan.
However, you might need to submit proof that you pay your bills. So, for example, do you have a history of paying your rent on time? If so, can you ask your landlord for a letter that states this fact?
While this is not one of the most common types of mortgage documents a broker requests, it can make a difference for people without a lot of credit history.
You might also want to print documents that show you paid all your utilities on time for the last year or two, as this can also show proof of your creditworthiness.
Gather The Documents Needed for a Mortgage to Simplify the Process
The mortgage process requires a lot of documentation and proof, primarily because houses are expensive.
If you want to get a mortgage to buy a house, you can start working on gathering the documents needed for a mortgage. By gathering them now, you’ll be prepared when you meet with your broker.
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