You can neutralize a huge chunk of mortgage application stress with one simple strategy—gathering up all the documents you’re likely to be required to provide before you submit your application. Your lender might not ask for all of these documents, but you’ll appreciate not having to scramble at the last minute if they do.
Don’t jump the gun and prepare too early, though. Lenders need the most recent versions of these documents, so don’t get more than a couple of weeks ahead of the process. But you might need some time to dig around and put your finger on a few of these items, especially if you’ve allowed your file cabinets to grow a little too stuffed and unwieldy in recent years.
Here’s what your lender is likely to ask you to show when you are ready to submit your mortgage application:
1. Paycheck stubs: Pay stubs allow your lender to verify your employment and income. You’ll need to show at least your most recent pay stub, and more likely several months’ worth, or even a year or two of records. If your paychecks are handled electronically, you may be able to print off records from a corporate website.
2. W2s: This tax form is another way lenders can verify your income. The most recent year is the usual requirement, but some lenders ask for forms covering the last two years.
3. Bank statements: Print off full bank statements for every account you hold, including savings and retirement accounts. Most lenders request three months’ worth.
4. Tax returns: Lenders typically require you to submit two to three years’ worth of income tax returns. In some cases, you’ll be asked to sign a form (IRS form 4506-T) that allows your lender to obtain a transcript of your tax return directly from the IRS.
5. Self-employment records: If you’re self-employed, documenting your income may require a few extra steps. You may be asked to provide copies of checks from clients or a profit and loss statement and balance sheet.
6. Credit account information: Assemble a list of every credit account, loan or debt you have, including account numbers and lender names and addresses.
7. Rent payment documentation: First-time home buyers may need to show proof they’ve consistently paid their rent on time. You may need to produce canceled checks and bank statements to back this up or provide contact information for your landlord.
8. Gift money documentation: If you’re using a monetary gift from someone else to help fund your home purchase, your lender may want to see a letter from the giver documenting that the money is in fact a gift and not a loan. You could be asked to provide deposit and transfer slips documenting the transfer.
9. Photo ID: Be ready to show a valid photo ID for every person whose name is on the loan application.
10. Address history: Assemble a list of all the addresses you’ve lived at for the past seven years.
11. Divorce decrees: Divorced applicants may be asked to show a divorce decree proving no other party has a claim to your property.
If you’re interested in buying or selling a home, take a look at our Real Estate Rewards Program.