How to Prepare Documents to Apply Mortgage Loan

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Getting a mortgage is likely to be the biggest financial commitment you’ll ever make; you’ll need to be as attractive as possible to lenders if you want to get the best mortgage deal. Along with this there is a need to be aware of the factors that will make you eligible. Here is complete guide to the process you may need while applying for a mortgage.

Calculate your Income:

When you are applying for mortgage, firstly make sure that you are financially able for ownership. Additionally, the lenders look closely at your credit score when determining the eligibility for a mortgage loan. Check the credit score and do anything to make it attractive. Such as lowering outstanding debt, disputing any errors and holding off on applying for any other loans or credit cards.

Credit Report:

Before going to apply check thoroughly the credit report make sure there is no incorrect information about you. This can be done either online through a paid subscription service or one of the free online services. If find any error then the issue can be solve by filing a dispute with one or more of the three credit bureaus: Equifax, Experian and TransUnion. However there is no need to provide a credit report to the lender and it is also possible to get a mortgage loan without perfect credit report.

Requirements for Applying a Mortgage Loan:

After calculating income you will require a list of document crucial for applying a mortgage.

Paycheck Stub:

One of the first thing the bank will require is the paycheck stub from the past 30 days in order to ensure that you are currently employed and how much is your current income .Lenders want detailed information of financial past and present which help them to predict financial future but also the recent pay stubs tell the lender that you’re still earning the same amount.

Bank Statement:

Lender will also require detailed information regarding to the most recent bank statement of each account you hold. So this will allow lender to know about the current money you have.

Assets:

It is also necessary to provide a list of other assets other than your bank accounts which may include investment records, retirement accounts, real estate, and auto titles, and other investments this will make up a large part of your financial picture and make the lender sure that you have enough savings to bear any unexpected expenses.

Debts:

Put together a complete list of all debts including credit cards, student loans, car loans, alimony and child support payments, along with a breakdown of balances and the minimum monthly payments on each.

No matter how much you’re earning, it can seriously impact the debt-to-income ratio, which is a crucial component to determining your overall credit score. If you’re spending beyond your means, or have a lot of high-interest debt, then there is a chance of less likely to qualify for the lowest rates on a mortgage.

W-2 Forms:

W-2 Forms supports the employment and income history. It will also prove to be a very helpful document. Similarly lender also wants to see your W-2 forum for the past two years. If you don’t have any W-2 to prove income, you can fill out Form 4506-T or Form 4506T-EZ to request transcripts of the tax returns if you didn’t save copies.

Profit and Loss Statement:

Many lenders required the statement of profit and loss which will let them know where you stand financially. In case you receive any supplemental income, such as SSI, commissions, overtime pay or tips or bonuses you’ll need proof. Additional income can help to qualify for a larger mortgage.

Outside Earning:

If you make money from other sources, there will be a need to provide detailed information about that, too. For example, someone who receives child support or alimony will likely have to provide a copy of the divorce decree. If you earn rental income from investment properties, you may be asked to provide a copy of the lease agreement. If you’ve received a big check recently, such as a gift from family to help with a down payment, the lender may require a letter from the person who gave the money explaining that it’s a gift and won’t be required to pay it back.

Bankruptcy:

If you had a bankruptcy within the last several years, you may be asked for the bankruptcy discharge papers. In some cases, a bankruptcy can appear on the credit report for up to ten years. Even if you’ve been on sound financial footing since then, a lender will want to see that issue have settled with creditors.

 

 

 

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