The financial journey of home ownership is on most everyone’s mind as they start thinking about life planning. Like any sort of investment, adequate planning and preparation are key when approaching this huge life step. Usually, securing a mortgage for a given property is the first step in this process. Getting your assets in order to achieve this goal may not be a very exciting or seamless effort but is well worth it to avoid further complications down the line. But what does this process even entail? Well, if you’re reading this on our site, you can probably guess that documentation plays a key role in the way we empower ourselves during key life decisions like securing a mortgage. Mortgage underwriters are trying to read into what kind of story your documents tell them. Your documents spell out a personal, financial narrative on your behalf. Thus, your responsibility then becomes making sure you are presenting the most attractive and comprehensive version of your mortgage documents that you possibly can.
Certainly, easier said than done. But as long as you keep yourself informed and knowledgeable about documentation needs, the process can move forward as smoothly as possible. The list below showcases some of the most important qualities of your documents to keep in mind when applying for a mortgage.
The documents you need will be highly dependent on your personal financial information
There are some specific documents that you can count on all most lenders asking for, like “Two years of W-2’s, two recent pay stubs, and two recent bank statements”. This is pretty standard practice for loan applications. Beyond these forms, lenders may request any sort of document that demonstrates your ability to consistently pay your dues in the future. For example, they might ask for the status of your retirement savings, gift of money letters, or your investment portfolio information. Or they’ll be curious about financial obligations that might detract from your ability to keep up with your mortgage. Ultimately, no two mortgage applications will be exactly alike, so it’s important to prove how your unique financial profile makes you eligible to take on a mortgage. Having all necessary documents within reach is crucial.
Documents aren’t just individual. Keep in mind how your mortgage documents are tied to others
With the wealth of documents, you need to supply in order to secure a mortgage, this step can be tedious, but is absolutely essential for a timely resolution to your application. As you know, many of your documents are not just connected to you. They’re integrated into a wide network of family, friends, brokers, lawyers, and banks. If you currently plan on wrangling these documents, you might be forced to navigate a complicated web of social relationships to access the documents you are looking for. Further complications will occur if you require certain admin privileges to access documents.
Your documents need to be up to date
When you are forced to update files in light of a new application, you might be at the mercy of the parties holding these documents to retrieve them. And even if your administrative privileges are taken care of, the simple process of recalling and revising documentation can eat up time and money that you might not have. Nevertheless, underwriters will expect you to promptly provide documents that accurately reflect your current financial and legal status. So, do everyone a favor, and make sure that the info you are providing is up to date.
Documentation should highlight resolutions to previous difficulties with financial information
“Difficulties” means any sort of documented occurrence that would signal to an underwriter that you are a risky or unreliable investment. For example, the person writing your loan might run your credit and take note of a low score, or defaults on previous financial agreements. It’s in your best interest to explain why these events don’t necessarily represent your current financial reliability. They might be more trustful if you provide the circumstances behind the struggles in your documentation. And if you have resolved something like a long-term debt or obligation, your documents should reflect that. Remember, your files are going to tell a story. Make sure you do everything in your power to tell that story in the most flattering way. A well-organized, current, and comprehensive application can be approved in 10-30 days, but can take much longer if you underestimate how important documentation is to the mortgage process. Many applicants find themselves retroactively editing the contents of their life documents to fit the needs of the modern home-buying process. So, skip the hassle, and be vigilant and prepared with your documents. In the realm of mortgages and beyond, your files should resolve more problems than they create.