Key Documents to Submit for a Loan Application

Owning a home is one of the biggest dreams that most people desire to achieve, and the sooner, the better. Since houses cost vast sums of money, buying them on a mortgage or home loan is usually the most common thing to do. For the home loan to be finally approved, you have to go through some steps known as the mortgage process, which involves the submission of various documents. These documents are meant to prove several things, such as your identity, your ability to repay the loan, your income, and more. You need to familiarize yourself with the various documents that lenders will require from you so that your loan is quickly approved without issues.

You must provide all the required documents and ensure they are correct and accurate, because the loan officers scrutinize them. Any incorrect, incomplete, or inaccurate documents will only delay your loan approval. So, what are some of the materials you need to provide for your home loan?

Pay stubs

You need to give proof of current employment and income, which will entail pay stubs for those who are employed. The lender will need to see the pay stubs from at least the last month, but cases may vary among lenders. Pay stubs are a good way to show your current employment and your take-home figure, which is crucial to determining the amount you can afford to pay back comfortably.

W-2 forms

When the loan officer asks for one month’s pay stub, they may need you to provide W-2 forms for the past two years. These forms show income history and act as proof of employment.

Credit report

The lender may not ask for your credit report, but you should be aware that they will pull it in the initial stages of your loan approval process. It is therefore prudent to acquaint yourself with the contents of the report, and if there are errors, you must raise disputes with the credit bureaus. If you have a good credit score, you are more likely to qualify for bigger loans and better interest rates or loan options. You should start building your credit rating early if you are planning on getting a home loan or any other loan. If your score is low, you can engage professionals who you can find at https://www.boostcredit101.com/ to help you improve it, so by the time you want to take out a loan, your score will help you.

Bank statements

Lenders will want you to provide the most recent bank statements from all the bank accounts you hold. These statements will enable them to see how much money you have and other crucial things.

Past tax returns

Most of the time when dealing with self-employed people, for whom W-2 forms for proving income are not applicable, lenders will need to see one or two tax returns. If you did not save copies of the returns, you might need to request them from the relevant department and avail them to your lender.

Proof of rental income

In case you own rental properties, you can use the income to qualify for the mortgage. Your bank or lender may want you to submit the schedule of your tax returns capturing the rental income, or a copy of the lease may suffice.

Year-to-date profit and loss statement

Lenders will need a completed year-to-date P&L statement from self-employed applicants to show the financial stability of your business.

List of debtors

Although your credit history shows your debtors’ details, your lender may need to get more information on some debts or on other obligations not captured there to be able to arrive at a more accurate debt-income ratio.

List of assets

Should you have other assets in addition to the money in your bank accounts, you should provide the lender with them as you submit income documents. Having more assets portrays your financial preparedness and capacity to take on a mortgage.

Conclusion

The above list is not exhaustive, as you may need to submit documents like proof of supplemental income, bankruptcy documents, or foreclosure documents to show you have no obligations on debts related to past bankruptcies/foreclosures. Also, there are other documents that your loan officer will inform you about when you embark on the home loan application process, which you will also need to submit.

 

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