Home mortgage loan lenders typically have strict lending requirements. This is particularly true for traditional fixed thirty-year home mortgage loans. In order to comply with the lender’s policies, the potential homeowner should gather documents and make appropriate copies for the mortgage lender or bank files.
Home Mortgage Loan Application
Each lender will have its own home mortgage loan application forms. These forms can be quite long and will require a great deal of personal and financial information. All information that is listed on the application will need to be proven with further documentation such as tax returns. The home mortgage loan application should be completed in its entirety and with full disclosure.
Pay Stubs or Proof of Income
The home mortgage lender will be interested in proof of income to prove that the buyer can afford the home loan payment. This can be accomplished by proving pay stubs, an employment contract or tax returns. In many cases, the lender will request the last two to three years of tax returns in addition to pay stubs to substantiate income.
Additional income that is received through child support, alimony, investments or other businesses should also be documented and provided to the lender. This income will need to be verifiable and should be an ongoing source of income for the buyer.
Credit Report and Credit Score
Part of the application process will be providing the lender with permission to request a credit report. Depending on the mortgage lender’s policies, a credit report may be pulled from one credit reporting agency or from all three. The three credit reporting agencies are Experian, Equifax and TransUnion. While in most cases, the credit reporting agencies have identical information, there are some situations where information can differ slightly from one report to the next.
Potential home buyers should check their credit report before applying for a home mortgage loan to clear up any possible discrepancies before applying for the loan. A free online credit report can be obtained through the Annual Credit Report website without any impact on the credit score.
If the potential home borrower is applying for a home mortgage loan for a home where an offer has already been made, the lender will need to be provided a copy of the negotiated contract. This will give the lender the necessary information to determine if the borrower can afford the home.
If the borrower has not yet found a home, the lender will be able to do a pre-qualification. Based on current rates and terms, the lender will provide the borrower with a home loan amount they are pre-qualified for in order to make the home shopping process smoother.
When applying for a home mortgage loan, gather all documents ahead of time. Make copies of all documents that will be given to the lender and only provide the original of the home mortgage application to the mortgage lender. Do not apply to multiple lenders at once as many inquiries into a credit report in a short time period may lower the credit score.