What documents are needed for a mortgage loan approval?
Years ago there was actually a no documents loan process for certain types of loans. Those are not applicable in today’s world of mortgage lending. Today we’re providing you with a list of documents that are needed for final loan approval. Some documents are required whether the loan is for a purchase or a refinance; others are pertinent to a specific type of loan.
Documents needed for either a purchase or refinance are as follows:
- Most recent pay stubs, showing a 30-day period
- Past two years W-2 forms and/or 1099’s (if self-employed)
- Signed Federal Personal Tax Returns for past two years
- Signed Federal Business Tax returns if applicable
- Asset statements for a 2 month period, or most recent quarterly statement. This should include any and all of the following and must include ALL pages.
- Checking
- Savings
- Stocks
- Bonds
- Mutual funds
- Money Market
- 401 K’s
- IRA’s
- If the property is or will be held in a Trust, provide Trust documentation
- For Investment properties:
- Lease agreement for rental properties
- Mortgage statement
- Property tax bill
- Homeowner’s Insurance Policy
- HOA or Condo fees, if applicable
- Hazard Insurance (homeowner’s insurance) Policy
- Complete Divorce/Separation Agreement /Property Settlement agreements, if applicable
- School Transcripts and Diploma if you are a recent graduate
- Contact name and phone number for Verification of Employment
For VA loans, the following is required:
- VA Certificate of Eligibility
- Original statement of service or DD-214
For Purchases only, we need the following:
- Ratified Sales contract
- Copy of Earnest Money Deposit AND bank statement showing the check has cleared your account
- Name, address and phone number of landlords for past 2 years if currently renting
- Sales Contract for existing home if selling and vacating to purchase new home
- Settlement Statement from the sale of current residence if vacating to purchase new home
For Refinances only
- Copy of most recent mortgage statement
- Copy of Owner’s Title Policy or settlement statement indicating that you have owner’s title insurance
- Copy of existing Homeowner’s Insurance Policy
Whether you’re purchasing or refinancing a property, you can download a copy of this List of Documents to help aid in your search for a loan. This list will be helpful to both you and your Lender as you work through the processing of your loan.
A pre-approval is a commitment by a lender to make a mortgage loan to a specified borrower, prior to the identification of a specific property. The pre-approval process starts with an interview and completion of a loan application, and ends with the lender issuing a pre-approval letter demonstrating that the applicant is a suitable buyer. The lender will typically require at minimum 2 years of W2 statements, 2 years of federal tax returns, 2 month’s of asset account statements, and a satisfactory credit report.
At this step the lender issues a written agreement guaranteeing the borrower a specified interest rate, provided the loan closes within a set period of time. To lock a rate the applicant must have a ratified contract and an established settlement date.
This is when the lender offers the official Good Faith Estimate, Truth in Lending Form and loan disclosures. These documents need to be presented to the applicant within 3 days of lock and will need to be signed and returned to the lender. It is also common for the lender to request additional supporting documentation at this point.
An appraisal is a written analysis of the estimated value of a property prepared by a qualified appraiser. This process is performed to make sure that the property is of fair market value and supports the agreed upon purchase price.
During the processing step the Loan Officer and his/her staff will gather and analyze all of the information to ensure that the applicant’s loan will meet the specific program guidelines. The Underwriter will then complete the final review of documents to verify that all appropriate disclosures and documentation is completed to support the issuance of final loan approval. It is common for the Underwriter to request additional explanations or documentation during this process.
The closing is a meeting in which the sale of a property is finalized with the buyer signing the mortgage documents and paying closing costs. Also called “settlement.” This is where the applicant receives their keys to their brand new home!