Almost all mortgage applications are electronic, so most of you will be completing your mortgage application online. This will typically happen on your lender of choice secure website.
Pro Tip number one, is that you create a folder on your computer so you can begin putting all of the documents in one central location so you can access them very easily and find them as you need it.
It’s not odd for the lender to sometimes ask for the same document twice so it will be helpful to have them all in this one location. Don’t question it, just get it to them 😊
Ok Let's get into the six documents that you're likely to need.
Number one are your pay stubs. Lenders need to know your actual income, and one of the best ways to verify your income is through your check stubs, but I know what you're thinking. I get direct deposits. I haven't even seen my check stubs in years. Do I even get check stubs? Well, you do, if you don't know where your check stubs are or how to access them, please ask your employer, I guarantee that you still do have one. We just went through this with one of my daughters whose name will remain anonymous for fear of retribution 😊
You have to contact your human resources department to find out how can you access a copy of your pay stubs, and they'll probably want at least 30 days of pay stubs. And then later in your mortgage transaction, they'll probably ask you for updated pay stubs. If you have more than one job, you need the pay stubs from each and every employer. I think you get the picture, it's very important that you know how to access them.
Now here's a pro tip. I had seen a lot of clients try to give screenshots from their cell phone of the pay stubs or those mortgage documents or even just showing like their check stub what their direct deposit is. Those will not be accepted.
They typically want a PDF of your check stub, so make sure you know how to access those because those screenshots will not work and you’re going to want to do this a lot earlier than you're going to begin your application because if there's a little time delay in getting that information, you won't be delayed in applying for your mortgage.
So definitely find out how to access them and then go ahead and start sliding those pay stubs into your folder. If you get any additional income, such as child support, alimony, a pension, retirement accounts, or social security, you want to make sure that you document that income as well. You’ll want to go to whatever the income source is to find the official paperwork for that income. So, it could be a divorce decree, it could be your retirement statement, your social security statement. You'll want to get those documents and either download them as a PDF or scan them into PDF document format and add them to your folder that you created so then you can upload them as part of your application.
And another pro tip, have your real estate Broker (me) help you if you do not have a scanner or access to those types of things, most real estate offices have those items and can surely help you.
One more pro tip is that if you have an iPhone, you can go into the Apple Notes app. Once in the app at the bottom on the screen you should see what looks like a piece of paper with a pencil over it. Click on that and then at the bottom click on the camera and choose scan documents. Ill send you my invoice for that one 😊
Number two, in your application, they're going to require your W2 for the last two years. This is how the lender will verify how much income you receive year to year. Has your income increased? Has it decreased? They're going to require your W2 forms. And right now, you may be saying, I don't know where my W2 is, I haven't filed my taxes in a long time, typically the w2 is going to be stapled to the tax return you filed last year and the previous year. Also, you probably gave your tax accountant a w2, unless you filed them yourself, yikes 😊
So now you have to go back, not one year, but two years and access those W2 forms. If you cannot access them easily on your own, you can contact your tax accountant to try to get a copy from them because they likely have it on file. You also can go back to your employer for a duplicate copy.
You will need to provide the previous two years tax returns. Please don’t tell me you haven’t filled in the last three years 😊 If you can’t find your tax returns, the IRS has an option on their website for you to get a copy or transcript of your returns. I have clients in the past that had some success with the IRS transcript option but it just took them a little bit longer to receive the need items.
That's why you shouldn't wait. You should organize yourself first before you just go ahead and apply for your mortgage. This is all also known as the 2-2-2 rule, Last two pay stubs, last two years w-2’s and last two years of income tax returns. Boom!
they're going to ask for access to your credit report from all three credit bureaus. Now, this is not a document that you give them, but on the application, they will ask for your social security number, and this will be for all applicants. So, every applicant that's applying for this mortgage, will be required to provide this information. You will supply your social security number and you will give them permission to check your credit. Most lenders will use the middle score. So, you have three credit scores. You have one with Equifax, one with Experian, and the other one is with TransUnion.
So, let's do an example. If your Equifax is 675, your Experian is 700 and your TransUnion is 730, they will eliminate the lowest, which is the Equifax, they will eliminate the highest, which is the TransUnion and they will use the 700 from Experian. Experian is your middle score for qualification in this example.
Be mindful of that. They will pull all three, but likely, well just about 100% chance that the lender is only going to use the middle one for qualification purposes. You will also need bank statements. Typically, at least two months’ worth of bank statements. You will be able to get your bank statements from your bank's consumer website. They'll have an option for you to download your current months bank statement and all your previous months statements. It will typically download into a pdf file format and you will want to download your last two months of bank statements or the current month and the two previous months.
My clients often ask me, well, I have a several accounts, at different banks or I have a savings account, a checking account an emergency account, which or what should I provide. My answer is to give them as much as you need to qualify. More is always better when seeking a new residential mortgage.
So, if you know that you're using your money from your checking account and your savings account in order to qualify for this mortgage, or that's where your income goes, your direct deposit, or that's where you're saving your down payment and money for your closing costs, then you need to supply those accounts.
But if you have some other accounts that you may also be accessing money from, then you need to supply those bank accounts as well. And again, if you're, if you have retirement accounts or that sort of thing, you want to be able to supply those as needed.
Number five is rental history.
These are typically just questions like, where do you live and how long have you lived there and how much rent do you pay? And those are pretty easy to answer. They will, at some point before you close on your home actually call and verify or ask for more documentation from your landlord or from your leasing office about your rental history. But as far as the application is concerned, they'll ask you some questions about your rental history. But don't worry if you still live with family or live at home with your parents and you've never rented before, you can still get a mortgage. So just ask the answer them truthfully, if you live at home, put that address and say you live at home, you pay rent, or you don't pay rent.
They're going to ask for a photo id. Now this is just to verify that the person applying is the person that is on the application, and they could verify that with a copy of your photo id. Go ahead and scan your license into the folder so it’s ready for the lender. This is all very simple and not complicated as some people may think.
My last piece of pro advice is to be truthful on your application. I say that because a lot of people don't realize that everything you put on your application is verified during the underwriting process. Sometimes that's not done until you’re a further in the loan approval process, typically when you're actually under contract on your new home.
It’s important to make sure you update your application, if your income changes, if your job changes, if anything changes, or if you are, scared, afraid or just don’t know if you should put certain things on the application, talk to your lender and just get some solid advice ahead of time. They really do want to make the loan work for you.
I had a client who has been looking for a home to purchase over the last 18 months and due to the crazy market we were experiencing, they were unsuccessful securing a property until recently. So now we went back to our lender to pick up the loan process and guess what was uncovered? The buyer client switched careers and was not making the same money as they were when we first applied for the loan. Now we have a new problem!
So, it’s very important to keep your lender updated and be truthful every step of the way. Just make sure you're truthful on the application because that's what they use to qualify you. And if anything changes, you may not qualify when it's time for your final underwriting approval
I hope this was helpful. Please put any questions or comments in this video about your mortgage application because I want to make sure that you're doing your application like a pro.