Basic Documents Required for a Mortgage
While daunting, the process of acquiring a mortgage can be much improved when you know exactly what is expected of you and what to bring. With all the paperwork it is easy to lose yourself in the paper trails and forget what goes where and why.
All the paperwork you fill out is filed through the lender and usually makes its way to an underwriter. This underwriter functions as a risk assessment analyst, they are in charge of determining the likely hood that the borrower will pay back the loan. This means they generally require the same items from the same people to assess your financial stability. These normally come in the form of: income, property,assets, and credit.
Potentially the most important category for mortgage acquisition is income. This involves looking into your employment history, monthly income, and any debts or payments that you make monthly, commonly referred to as your income to debt ratio. The lender analyzes the availability for the required monthly payment and whether they think it an acceptable risk to bet on. In addition to wanting to see steady employment and income, the underwriter will also assess whether your income is likely to change or fluctuate during the process of paying the loan.
The property for which the mortgage is being pursued for is also a factor. The lender might change the availability of a mortgage based on whether they interpret the property as a single family unit or another type of property. These changes can impact how the loan gets underwritten. This directly correlates to the loan to value ratio of the property.
As well as analyzing your income and employment history, a lender may choose to look into the amount and types of assets you currently hold. This may result in an inquiry into the ability to sell these should you use one as a leverage against the mortgage. They also ensure that any money used as a down payment is coming from your account and wasn’t a gift.
Finally lenders look into your credit and how you have handled money and situations similar to the deal you are entering into before. If your history shows a lack of faith to the payments or too many dings and dents on your credit score from inquiries this can also be read as a risk to a lender.