Although it might appear as though getting a mortgage is easier than it was a few years ago, thanks to technology, the process is still dicey. Industry insiders know the majority of loans do not close on time. But there are a few ways to smooth the process if you’re applying for one. Here’s what you need to know if you’re going to be getting a mortgage in the near future.
You might recall the mortgage meltdown? After the housing crisis, the mortgage industry went through a total overhaul, making the ability to obtain a fixed-rate mortgage a pile of paperwork and a series of processes. Your lender should convey to you that the mortgage process is very, very difficult and they don’t control many of the things in the loan process, but they can help you navigate through the process to get to the finish line.
Your Paperwork Checklist
Consumers who find the mortgage process to be very easy are the people who have their financial house and documents in order. This means providing the following things to the lender:
- Two years of federal income tax returns complete with all pages and all schedules
- Two years of partnership returns (if applicable)
- W-2s for the past two years
- Pay stubs for the last 30 days
- Complete bank statements with all pages for the past 60 days. These should include all assets for the past two quarters.
- If divorced, a full copy of the divorce decree including all pages and all schedules including the marital settlement agreement.
- If paying child support, alimony, or tax debt, provide the complete payment agreement with all of its pages.
- If a previous bankruptcy exists, all of its papers are needed, including the schedule of creditors.
- If a foreclosure exists on your credit report (within the last 7 years), provide the actual date the house was sold in the trustee sale, supported with a trustee’s sale deed.
- If a short sale exists in your past, provide a copy of the settlement statement from the transaction.
- Insurance contact information
Do you notice a recurring theme? Every tiny piece of documentation associated with the above items becomes critical to the timely structuring and successful funding of your mortgage application. Put simply, if there is anything missing —even if a page is blank — it will cause a delay in your file.
The examination process lenders must perform for each and every borrower is very thorough. Your credit report and any outstanding loans are closely examined, and it’s best to have as high of a credit score as possible in order to score a better (lower) interest rate. (You can view two of your credit scores, updated each month, for free on Credit.com.) The underwriting (vetting of the mortgage application and support documentation) is designed to make sure the loan being originated has little risk when the loan is sold to Fannie Mae or Freddie Mac.
If you’re looking to get mortgage loan today, be on top of your game with your financial paperwork and provide every single financial piece of documentation your lender needs. Be a smart mortgage borrower and recognize the mortgage process is not easy, and the right lender should be upfront about the process you’re about to start.
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