Obtaining a home mortgage in today’s market can seem like a confusing and complex process. In order to help understand the process, it helps to know what documentation will be required and how these documents will be reviewed.
The mortgage applicant will be asked to provide their most recent paycheck stubs covering a one month period (showing year to date income) and the last two years of W-2 forms and Federal Tax Returns. The lender will also verify the borrower’s income and employment directly with their employer in the form of a verbal or written verification of employment.
The Lender will analyze this income over the last 2 year period and determine the likeliness that the income will continue in the future. The lender is targeting a new mortgage payment that is about 1/3 or less of the borrower’s gross monthly income.
The Lender will pull a tri-merge credit report that contains information from the Trans Union, Equifax and Experian credit bureaus. Each credit bureau will give each borrower an individual credit score as well as information about a customer’s current and past credit history. Each loan program will have specific credit score requirements. The higher the credit score, the better.
The borrower will be asked to provide bank and investment account statements covering the most recent two month period. The Lender will want to see that the customer has sufficient assets in their accounts to cover the down payment, closing costs and any reserves that are required.
The lender will order a property appraisal to be conducted by an independent third party Appraiser. This report will provide a list of comparable homes that are located within one mile of the property and have sold and closed within the last 90 days. The report will also list any Health and Safety issues that need to be repaired before the loan can close.
Our partners at Northwest Mortgage Alliance can answer any question you might have about the loan approval process, qualification criteria and loan program options. They can be reached by phone or e-mail.