Mortgage Basics
Application Checklist

Property Documentation

When applying for a mortgage, property documentation is one of the first things lenders will ask for if you already own a home. This includes your current mortgage statement (if refinancing), homeownership insurance (HOI), tax information, and any homeowners association (HOA) details. If you are refinancing, your lender will want to review your current mortgage statement to verify your existing loan balance and monthly payment if the home is financed. Homeowners insurance is required by lenders to protect the property when a home is financed, and you’ll need to provide a copy of your policy that covers both the structure and any personal property, also known as an insurance declaration page. Property tax documentation is also essential, as lenders need to verify your financial obligations. If applicable, you should provide the most recent tax bill for the property, but in most cases Vision Home Mortgage will pull your property taxes. Additionally, if your property is part of a homeowners association, the lender may request your most recent homeowners association bill to confirm the monthly payment. This helps the lender determine additional financial obligations related to your properties owned. Having all these documents ready ensures your application will be processed without unnecessary delays.  

Income Documentation

One of the most critical components of your mortgage application is proof of income. Lenders need to assess your financial stability and ability to repay the loan, and they will require several forms of income documentation. For W-2 employees, providing recent pay stubs (the last 30 days) and W-2s from the most recent past two years is a standard request. These documents show your current income and any income withheld including taxes, helping the lender determine your debt-to-income ratio (DTI). If you're self-employed, lenders will typically ask for tax returns from the past two years, although bank statements can be substituted for a higher down payment (typically 10% or more depending on your credit score). This allows them to assess your business income and overall financial situation which includes your ability to repay the loan. You may also need to provide a profit-and-loss statement or other relevant financial documents, especially if your income varies from year to year. Ensuring that you have the appropriate income documentation will streamline the approval process by verifying your ability to repay the loan.  

Alimony and Child Support

If you receive or pay alimony or child support, you may be required to provide documentation of these payments or receipts. Lenders will take this into account when calculating your monthly obligations and ability to repay the mortgage. You’ll need to provide official documentation showing the terms and amounts of any alimony or child support payments, whether you are the recipient or the payer. This usually include divorce decrees, court orders, and/or bank statements showing payment or receipt. While payments are not considered income, they are considered part of your monthly debt obligations and will be factored into your debt-to-income ratio (DTI). Make sure these documents are up-to-date and accurate to avoid delays in processing your mortgage application.

Source of Funds

Lenders will also want to verify the source of your down payment and any other funds used in the mortgage transaction. This ensures that the funds are legitimate and not from a source that could pose a risk to the lender. You will need to provide recent bank statements, usually for the past 60 days, to show your available funds. These statements help verify your down payment and other sources of funds for closing. If part of your down payment is a gift from a family member, you will need to provide a gift letter stating that the funds are a gift, not a loan that will need to be repaid. Additionally, if you are using other assets, such as investments or retirement accounts, to fund the down payment, you'll need to provide documentation showing the available balance and the transfer of funds. Having clear and well-documented proof of where your funds are coming from will help avoid any delays in the underwriting process.

Debts and Obligations

Your credit report plays a crucial role in the mortgage application process, as it provides an overview of your existing debts and obligations. Lenders will use this to calculate your debt-to-income ratio (DTI), which is a key factor in determining your loan approval. Lenders will typically pull your credit report directly, but you can also review it beforehand to ensure there are no errors or discrepancies. Your credit score, payment history, and current debts will all be considered when assessing your mortgage application. These will be factored into your DTI and can impact your mortgage eligibility. This is usually determined by your credit report. By ensuring that your credit report is accurate and up-to-date, you can avoid surprises during the application process.

Be Prepared and Streamline Your Mortgage Application

By gathering all the necessary documentation before starting your mortgage application, you’ll be better prepared for the process and avoid unnecessary delays. From property and income documentation to your credit report and source of funds, each piece plays an important role in securing your mortgage. By following this checklist and having everything organized, you can help ensure a smooth and efficient application process Keep in mind that more or less documentation may be requested depending on your unique scenario. Remember, your mortgage broker is there to guide you, so don’t hesitate to ask about anything if you’re unsure of it, including any requested documentation.