What are the documents needed for a loan?
I always tell my clients “provided don’t fight it”. In other words, lenders are going to ask for a whole bunch of documents and if you want to get the loan you have to provide those documents. See the Counsel Mortgage ACID Test for info on what is needed in order to get approved for a residential loan.
Be prepared to submit a lot of documents. Also, its not you. Don’t take it personally. Everyone is going through the same process to get a loan.
Here is a general list to have ready:
1. Drivers license, passport, non-permanent resident alien card, social security card
2. Last 2 years Federal Tax Returns, all pages
3. Last 2 years W2s or Schedule K1s
4. Last 2 pay stubs
5. Year-to-date profit and loss statement if self-employed
6. Last 2 months bank statements, checking and savings accounts, all pages
7. Last 2 months investment account statements, both retirement and non-retirement, all pages. These statements are typically quarterly, so the last quarter’s statement should be fine
8. Insurance info
9. Mortgage statements
10. Real estate tax and homeowners insurance statements
11. Documentation supporting unexplained large deposits in your bank accounts
12. Letter of explanation re inquiries on your credit report to make sure there is not any credit that does not appear on your credit report
13. Leases for rental propertieso
14. Copy of divorce decree, court order for child support
15. Copy of front and back of earnest deposit check and bank statement showing the check cleared
16. For condos – name and phone number of the property manager for the HOA
17. If you will not be able to sign the documents, an executed Power of Attorney specific to the address and limited in time
18. If receiving a gift, an executed gift letter, the donor’s bank statement or other statement showing capability to make the gift, evidence of the transfer of the gift, and receipt into the donee’s bank account
19. Social security award letter
20. Pension award letter
21. Copy of the HUD closing statement for the sale of your home if down payment on the new home is coming from the sale of your old home
Last two years tax returns
We’re starting to see this requirement more frequently, especially if you’re self-employed. For self-employed individuals they’re going to look at what your net income is. Not your gross receipts, but your net income after your expenses. And they’re going to also want to see your business returns as well.
Year to date profit and loss statements
They’re going to ask for that as well. For example, if we’re in August, they’re going to want to see the following year so they can grasp how you’re doing this year. They’re going to ask for about a half years work in that instance for profit and loss statements.
Last couple months worth of bank statements
They do look at deposits and they’re going to look at large unexplained deposits. This is due to the recent Anti-Money Laundering law. Any unexplained deposits are going to have to be documented when you’re applying for a loan. Prepare for that because some banks display deposits as “deposit” and doesn’t list your employer. They’re going to want documentation of those deposits and if you can’t provide them then they might not consider those assets in your application.
They’ll also ask for a letter of explanation regarding any inquiries on your credit report. They want to see that there isn’t any credit that’s not on your credit report that you’ve applied for through somebody else. So let’s say that you went to apply for credit cards recently. It may not appear on your credit report but there may be an inquiry from the credit card company right there. You will have to note that you did just apply for a credit card. You may have to provide the terms of what that credit card is.
What if you are going through a divorce?
If you are going through a divorce you will have to provide the divorce decree once it’s final. Any child support awards will be figured out in the debt to income ratios.
How about gifts letters?
Gift letters can be from relatives and those are fine. When we’re going to provide documentation there’s usually a letter you need complete. With this, the donor’s going to have to provide documentation showing they have the funds to give and then they’ll transfer the funds into your account.
When shopping for the best mortgage broker in Arizona, you need to know the history of the company and their mortgage brokers. At Counsel Mortgage Group, LLC, founded by an experienced CPA and attorney, we have closed hundreds of loans over the years and specialize in assisting you to obtain the right loan. Check our our experienced mortgage brokers and give us a call today or contact us. We look forward to working with you!