A mortgage is the loaner’s offering as collateral or security deposit to the financial institution. It’s the guarantee against the loan you are applying for. However, you need to provide some security. Most mortgage lenders want proof that you can pay back the loan amount. For this, you need to gather some paperwork for a mortgage application.
Eligibility Criteria For Loan Approval
When you apply for a loan, gathering the paperwork for your mortgage is an arduous task. Before gathering all the required documents, it is essential to know the eligibility for the loan. Various factors determine the eligibility for a home loan, which include the following:
- Identity proof of the applicant.
- Age of the applicant.
- Their Employability status, i.e., salaried or self-employed.
- If salaried employees, then the organization for salaried employees.
- If the applicant is self-employed, then the source of income for these individuals.
- The Residential status of the applicant.
To prove that you meet all the above requirements, you will be needing a lot of valid documents.
Essential Paperwork for Mortgage Application
Once you clear all the eligibility criteria, here comes the hectic work that you need to do to close the deal successfully. You need different documents for online mortgage application. Here, we are summing up the most crucial five documents you’ll require. These include the following:
1. Identity Proof
Before lending the loan, banks and other financial institutions need to confirm the identity-check of the applicant. The applicant can prove their identity through several documents like social security card, passport, driving license and state-issued ID card.
2. Income And Employment Documents
The applicants applying for the loan can be salaried employees or self-employed professionals.
For salaried professionals:
- It should contain your most recent pay stubs.
- Proof of all your overall assets, investments, and debts, including insurance.
- The lender will also check your credit history to analyze your ability to pay back the loan.
- Bank statements of the last three months.
- W-2 forms and tax returns.
For self-employed applicants:
- You need personal tax return and business tax return of the previous 2 years. These include K-1, 1120, and 1120S.
- Your business license.
- Your balance sheet reflecting assets and debts along with profit and loss statement.
- The lender will also check your credit history to analyze your ability to pay back the loan.
- Bank Statement of the last three months.
3. Rental History Or Proof Of Residence
If you’ve been living on rent so far, then your mortgage lender will want to know if you paid rent on time. For that, they’ll check the following:
- Proof of rent payment for the last 12 months
- Contact information of your landlords in the last 2 years
In case you own your existing home, you need to provide with the following:
- Address
- Value of property
- Property status
- Monthly expenses for the property
- Purpose of ownership
- Details regarding mortgage if unpaid
4. Gift Letters
Sometimes, we receive money for down payment and closing costs as a gift from family members too. You cannot take a loan for paying these two. However, if you are receiving it as a gift, then you need a letter confirming the same signed by the providers.
5. Your Age Proof, Bankruptcy, And Proof Of Expenses
You can provide age proof through identity verification, but the lenders need assurance that you can pay back the amount. They check your income to expense ratio, bankruptcy history, and various illegal activity histories.
On a Final Note
These are essential documents required when you are applying for a mortgage application. The list may vary for the paperwork for a mortgage application. You need to gather and store these essential documents beforehand for successful loan closure.
Also read our previous blog story👇
https://mortgageservicesce.com/get-home-loan-by-mortgage-service/
