Mortgage lenders require paperwork that verifies every facet of your financial life: income, debts, assets and more. The lender will request the following documents, so it is very important to prepare yourself and gather them before you apply for a mortgage:
W-2 forms from the previous two years, if you collect a paycheck. Guidelines typically require the most recent Form W-2 wage and tax statement, but some borrowers are asked for two years of W-2s.
Profit and loss statements or 1099 forms, if you own a business. Self-employed borrowers may have to submit a current-year profit and loss statement, especially if the year is more than half over or they haven't filed their prior year's tax return.
Recent paycheck stubs. Loan guidelines typically specify one month of verified income. You can prove this with paycheck stubs.
Most recent federal tax return, and possibly the last two tax returns. Tax returns are a key piece when applying for a mortgage. Serves to check your income sources and expenses. Also, demonstrate your debt capacity.
A complete list of your debts.Consider credit cards, student loans, car loans and child support payments, along with minimum monthly payments and balances. The list of debts tells the lender how much you owe each month. The lender then calculates your debt-to-income ratio, which is key to the loan decision.
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Calculating Debt-To-Income Ratio: Jessie and Pat together earn $5,000 a month. Their total debt payments are $2,000 a month. Their debt-to-income ratio is 40 percent ($2,000 divided by $5,000 = 0.4).
List of assets.This includes bank statements, mutual fund statements, real estate and automobile titles, brokerage statements, and records of other investments or assets. The lender wants evidence that you will have enough savings and investments to weather unexpected expenses after you have paid for the down payment and closing costs.
