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Your mortgage lender will likely require your most recent W-2’s from all current employers for each applicant. However, some lenders may even require W-2’s from the past two years. If new W-2’s become available during the loan application process, your lender may require those to be produced as well. Contact your employer if you don’t have a copy of your W2’s. If you still are not able to get your W-2’s you still need to produce them to your lender. The IRS does allow you to order copies of documents you have submitted along with a copy of your tax return. For additional information on obtaining documents from the IRS visit: https://www.irs.gov/uac/newsroom/how-you-can-get-prior-year-tax-information-from-the-irs
Most lenders have a requirement that you produce 30-45 days of pay stubs for each applicant. Because many employers now provide electronic pay statements, you may be able to print the necessary documents online. If your current pay stub is not representative of your typical earnings (maybe due to sick time, vacation, or an altered schedule). You should be sure to produce additional months’ pay stubs to show the lender your normal take home pay amount.
The lender will need to see recent bank statements. Typically, 3-6 months of your most recent bank statements will be needed to verify income and assets. If you are making the down payment yourself you will need to show where that money came from and have proof the money was not borrowed.
If your lender allows you to use a gift for part or all of your down payment, you may be asked to provide proof of the origin of the gift and of the fact that it is indeed a gift and not a loan. If you received the gift from family or friends. They may be asked for a copy of their bank statement or a statement from the account they provided the gift from. The person giving the down payment gift will also need to provide a gift letter stating they’re not expecting repayment.
Count on being required to produce full versions of your most recent federal tax return. These returns will be examined closely. Ensure that your tax returns are accurate and reflect your actual income and deductions. Your lender will also want to obtain your tax transcript and may require you to sign the IRS Form 4506-T. That for gives the lender permission to obtain the transcript directly from the IRS so that it can be compared to your tax return. If you are not up to date on filing your taxes, you will need to file them before you can apply for a loan.
In addition to providing income about your income, you may want to disclose other debits that will show up later on paystubs or taxes that could possibly cause loan changes. The lender won’t necessarily ask these questions due to current laws but they are needed in many scenarios. Example, Child Support, Tax Payments, New Car Loan Not Reported Yet.
Your lender will likely request bank statements for your checking and savings accounts to verify your down payment source and the value of the accounts. Along with those statements, you will also need to provide a list of your assets so the lender knows you are financially sound and will remain in a good financial position after paying both the down payment and the closing costs associated with the requested mortgage.
If you are renting a home now, your lender may ask to see cancelled checks or proof from your landlord that your rent has consistently been paid on time. If you are a homeowner rather than a renter, the lender may request statements from your bank or current lender that shows you have consistently paid your existing mortgage. On-time payments, especially for your current housing arrangements, are an important consideration for most lenders and are given a lot of weight in lending decisions.
For self-employed individuals, in lieu of producing W-2’s, you will likely need to produce a profit-and-loss statement for the current year.
While the lender will not ask you to produce your own copy of your credit report, the lender will pull your credit reports, so it is best to know what they contain. Pull copies of your credit reports from each of the major bureaus and ensure any errors are corrected. If you have unpaid collections or multiple late or missed payments. You may wish to delay your mortgage application while you spend some time cleaning up your credit. Credit reports are the most important factor a lender uses when making lending decisions and providing the mortgage rate. If your credit score is lower than the lender requires, or is borderline. You should check out JoeLovrek.com, I have a few credit ideas for you that will help get you on the right track. Even if you have been pre-approved for a mortgage loan. You can still work on improving your credit score while you are searching for a home. Once you have started the loan process do not do anything credit wise.
The lender will need a copy of the home sale contract to verify the purchase amount and potentially some of the terms.
If you have any additional income that you want your lender to take into consideration when making a lending decision. You will need to produce proof of that income. If you have rental income from a home or farm. Copies of the lease agreement or monthly payments will be sufficient for current year investments. However, for older investments, it should be reflected on your tax returns. For alimony or child support, a copy of the court order may be necessary. You will need proof in the form of your bank statements or copies of cancelled checks showing the payments are regularly made and you may have to provide proof of your child’s age.
You will need to produce a divorce decree if you have been married in the past. Sometimes even a couple years after a divorce has been finalized, the lender will still need the decree to prove child support payments or obligations if any. This document will typically reveal to a lender if there are relevant child support or alimony obligations.
If you have been through bankruptcy, the lender may wish to see proof that certain debts have been discharged through bankruptcy and are no longer outstanding. The lender needs to ensure that you are no longer legally obligated to pay those debts in order to fully understand your financial position.