Buying a home may seem like a difficult and scary process, and many home buyers are afraid of doing everything themselves. It is true that you should ask for help if you don’t understand how the process of taking out a mortgage loan works from start to finish, but you should also know that it is something that you can learn on your own (Read: Here’s a Cheetsheet to Understanding House-Pricing Indexes).
Buying a home with a mortgage used to be a hassle in the past, but the housing industry has changed significantly. Most lenders do everything in their power to make your mortgage loan application process easier and quicker. With the help of your computer and the Internet, you can even do it from home, without having to run around town signing a bunch of papers (Read: More People Turning to Online Mortgage Loans – Should You Too?).
Gathering the Necessary Documents
It is recommended that you obtain some, if not all, of the documents needed when applying for a mortgage before you even apply, just to make things go quicker. This may seem like a scary task for some home buyers, but, with a simple phone call, you can find out which documents you will need before you visit the lender for the first time. Sometimes you can even find out which documents you will need by simply visiting your lender’s website.
Lenders can also gather these documents on your behalf, sometimes for a small fee, and sometimes for free. Asking your lender before you start piling up papers about your finances is better than doing it on your own and finding out that your lender already has access to some of the documents that you had to wait in line for.
Here are some of the documents that you will most likely have to have on hand when you apply for a mortgage loan:
- Residence History. This is a list of the places where you have lived in the past couple of years. You will only have to type up a list, and provide a letter from your landlord if you have been renting, which should verify that you have paid your rent on time.
- Income. You will also need documents that verify your income for the past two years. Tax returns, W-2 forms, and pay stubs should be all you need to prove your income, unless you are self-employed, in which case you will need to provide additional documentation (Read: Self-Employed? Here’s How You Can Qualify for a Mortgage!).
- Additional Income. If you have income from child support or alimony, find out if your lender needs it and for which period.
- Gifts. If you receive part or all of the money that you are using as a down payment from someone as a gift, your lender will want to see a signed letter from the person who made the gift.
- Assets. Documents that list your assets. You will need statements form your bank accounts, both checking and savings, IRA and mutual funds.
- Debt. In addition you will need a list of all your current debt. Since your lender can verify your credit report, this list will only help you make sure that everything in your credit report is correct.
There are several other documents that your lender will want to see when you apply for a mortgage loan, so checking with them a few days before will help, and give you enough time to find these documents.
Applying for a mortgage is not as difficult as it seems. Yes, you will need to provide several documents which you may not know where to get, but, with a simple Internet search or a few phone calls, you can quickly get the help that you need and get on the right track to applying for a mortgage loan and becoming a home owner (Read: Buying Your First Home: The Process from Start to Finish).