The Documentation Required for a Mortgage Application

After you fill out your mortgage application, the next step is to start pulling together documentation required by the lender. Documentation is just proof of the statements you make on your loan application. The exact paperwork your lender will ask for may vary, but a few key documents are commonly required for just about any mortgage loan.

Tax Returns

Find and review your tax returns before you apply for a mortgage. Your lender will likely ask for a copy of your tax returns for the past two to three years. The mortgage company may simply ask you to sign an IRS form 4506T, which authorizes the lender to pull your tax return transcripts on your behalf to continue processing the loan instead of asking for the copies you have on file.

Income and Employment Verification

If you want to get a mortgage you need some type of employment — a regular and consistent source of income. That includes self-employment income if you run your own business. The lender asks to see pay stubs and to have your employer fill out a verification form confirming that you currently work for the firm. If you work for yourself, you may have to produce proof of payments you've received from clients or customers over the past few years, such as deposited checks and paid invoices. You usually have to show at least two solid years of employment at the same job or show a profit in your own business.

Bank Statements

You must also provide a copy of two months of bank statements from your checking and savings accounts as part of your documentation package. The lender commonly asks to see every page of each statement. So if you have a 15-page long statement, you need to provide all pages from one to 15, even if a couple are blank. This allows the bank to verify your average balance in the account and that you have enough cash to cover closing expenses. The lender also takes note of the deposits made to the account over that time period. Activity that the bank deems "out of the ordinary" could prompt questions. For instance, if you usually deposit your regular biweekly paycheck then suddenly have a very large random deposit, the lender may ask for the source.

Stocks, Retirement Accounts and Other Assets

You must also provide proof of any assets you list on your mortgage application. That includes stocks and bonds as well as 401k, IRA and other retirement accounts. If you own a car or other valuable item outright that you listed on your mortgage application, you may have to provide a valuation of those assets as well with your documentation.

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