If you're applying for a home loan, your mortgage lender will want to take a deep dive into your financial life. This is to ensure that you meet all of their underwriting guidelines and are in the position to easily afford your new mortgage payment. Throughout the approval process, you can expect to be asked for documents that substantiate different aspects of your income, work status, expenses and more. It's little wonder that it can take up to 60 days to complete.
Getting your paperwork organized in advance is a great way to streamline the process and improve your odds of getting approved. Here we take a closer look at the supporting documents you'll need if completing the uniform residential loan application (URLA). It's the form most lenders use to determine a borrower's mortgage eligibility.
This section of the application demonstrates your ability to repay your loan. Your lender will zero in on your past and current job situation, including how long you've been at your job, and will likely verify your answers with your employers. Beyond that, you may be asked how long you've been working in your industry. Whether you work for an employer or for yourself, most lenders will want to see steady income for a minimum of two years.
Your gross monthly income is an important number. This represents your earnings before taxes and other deductions are taken out. While your pay stubs and W-2s may reflect this, you may also be asked to provide bank statements to substantiate any other incoming funds—especially large amounts. This is to ensure that you aren't borrowing money for your down payment. If you are, this amount will count toward your debts. (More on this shortly.) If money is being gifted to you, the person providing it will have to complete and sign a gift letter supplied by the lender.
If you're retired or living on passive income, you'll still need to demonstrate that your income is reliable. Be ready to provide proof of retirement account balances, Social Security documentation and any paperwork related to annuities or pensions that you draw on for income. This includes any income generated by rental properties, capital gains and dividend stocks.
For all borrowers listed on application:
On top of your income, your lender will also want to understand your financial liabilities. After all your bills are paid, how much is left over each month to put toward a new mortgage payment? You'll be asked to list out all of your debts, as well as expenses like child support and alimony you may provide.
For all borrowers listed on application:
Mortgage lenders care most about your financial health, but they'll also want to verify other important details. Having the following documents ready to go can expedite your application process.
For all borrowers listed on application:
You won't need to provide your own credit reports or credit scores when applying for a mortgage (your lender will pull those themselves). However, going over them before submitting any mortgage applications is vital because it clues you into what potential lenders will see. You can get a free copy of your credit report from all three consumer credit bureaus at AnnualCreditReport.com. You can also check your credit report and credit score for free with Experian. Doing so allows you to get ahead of any potential roadblocks in your path. These may include:
In some instances, your mortgage lender may ask you to provide a letter of explanation. This document gives you the opportunity to expand further on areas of your mortgage application that raise red flags for the lender—like credit issues. If there are any derogatory marks on your credit report, your letter of explanation may quell their worries. Now is the time to briefly explain what happened and when, hopefully providing reassurance that the issues are behind you.
One problem may be a lack of credit history. If you have a thin credit file (few credit accounts on your credit report), your lender may suggest an FHA loan over a conventional loan. FHA loans, which are backed by the federal government, allow for credit scores as low as 580 with a down payment of 3.5%. If you can put down 10%, you may be able to qualify with a credit score of 500. For a conventional loan, the minimum credit score is typically 620.
If you're applying for a home loan, your mortgage lender will want to take a deep dive into your financial life. This is to ensure that you meet all of their underwriting guidelines and are in the position to easily afford your new mortgage payment. Throughout the approval process, you can expect to be asked for documents that substantiate different aspects of your income, work status, expenses and more. It's little wonder that it can take up to 60 days to complete.
Getting your paperwork organized in advance is a great way to streamline the process and improve your odds of getting approved. Here we take a closer look at the supporting documents you'll need if completing the uniform residential loan application (URLA). It's the form most lenders use to determine a borrower's mortgage eligibility.
This section of the application demonstrates your ability to repay your loan. Your lender will zero in on your past and current job situation, including how long you've been at your job, and will likely verify your answers with your employers. Beyond that, you may be asked how long you've been working in your industry. Whether you work for an employer or for yourself, most lenders will want to see steady income for a minimum of two years.
Your gross monthly income is an important number. This represents your earnings before taxes and other deductions are taken out. While your pay stubs and W-2s may reflect this, you may also be asked to provide bank statements to substantiate any other incoming funds—especially large amounts. This is to ensure that you aren't borrowing money for your down payment. If you are, this amount will count toward your debts. (More on this shortly.) If money is being gifted to you, the person providing it will have to complete and sign a gift letter supplied by the lender.
If you're retired or living on passive income, you'll still need to demonstrate that your income is reliable. Be ready to provide proof of retirement account balances, Social Security documentation and any paperwork related to annuities or pensions that you draw on for income. This includes any income generated by rental properties, capital gains and dividend stocks.
For all borrowers listed on application:
On top of your income, your lender will also want to understand your financial liabilities. After all your bills are paid, how much is left over each month to put toward a new mortgage payment? You'll be asked to list out all of your debts, as well as expenses like child support and alimony you may provide.
For all borrowers listed on application:
Mortgage lenders care most about your financial health, but they'll also want to verify other important details. Having the following documents ready to go can expedite your application process.
For all borrowers listed on application:
You won't need to provide your own credit reports or credit scores when applying for a mortgage (your lender will pull those themselves). However, going over them before submitting any mortgage applications is vital because it clues you into what potential lenders will see. You can get a free copy of your credit report from all three consumer credit bureaus at AnnualCreditReport.com. You can also check your credit report and credit score for free with Experian. Doing so allows you to get ahead of any potential roadblocks in your path. These may include:
In some instances, your mortgage lender may ask you to provide a letter of explanation. This document gives you the opportunity to expand further on areas of your mortgage application that raise red flags for the lender—like credit issues. If there are any derogatory marks on your credit report, your letter of explanation may quell their worries. Now is the time to briefly explain what happened and when, hopefully providing reassurance that the issues are behind you.
One problem may be a lack of credit history. If you have a thin credit file (few credit accounts on your credit report), your lender may suggest an FHA loan over a conventional loan. FHA loans, which are backed by the federal government, allow for credit scores as low as 580 with a down payment of 3.5%. If you can put down 10%, you may be able to qualify with a credit score of 500. For a conventional loan, the minimum credit score is typically 620.
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