Understanding the Loan Checklist

A mortgage application typically requires a paper trail of evidence to show you can repay the loan once you apply. They are typically statements of personal and financial information of the borrower to approve a loan. Lenders use these documents to evaluate whether or not they will provide you with a loan. Most loan officers can confirm that first-time home buyers often make mistakes when submitting their documents, resulting in delays or denials. The process of homebuying is challenging and confusing, and at United Wholesale Lending, we believe purchasing your dream home shouldn’t be stressful. Our team is here to advise you to stay ahead of the curve and avoid mistakes.

The new home loan checklist is a list of documents a homebuyer needs to prepare and organize for smooth, on-time closing and a straightforward pre-approval process. Your loan officer will need scanned copies of all the items on the loan checklist. Submitting photos, selfies, or screenshots of the materials will delay the process.

The first category on the checklist is Borrower Information. The lender will request paperwork from the borrower to evaluate the risk of lending money to the borrower. In many cases, homebuyers provide their current (not expired) driver’s license or permanent alien resident card (if applicable). A loan officer will ask the homebuyer for a scanned copy of the borrower’s information. Scanning the borrower’s information provides a document to the lender. Again, submitting photos and screenshots are not allowed. Lenders will return any unscanned documents, which ultimately delays home-buying.

The second category on the checklist is Income Documents. The documents requested in this category are on a case-by-case, loan-by-loan basis. Some lenders will require more documents depending on your circumstance. A homebuyer must supply all pages and all schedules of their most recent two years’ tax returns. If you’re self-employed and own more than 25% of any company, be ready to provide the most recent two years’ business tax returns, all pages, and all schedules. The lender must also receive any W2s for the most recent two years. If you had more than one W2 in that taxable year, provide them all. The lender will audit all of these documents and ensure they are valid. If the homebuyer does not supply the lender with a total view (all pages), it will delay the home-buying process. Lenders require a homebuyer’s most recent four paycheck stubs to validate current employment. The lender allows no gaps in pay, so do not provide a paycheck stub from six months prior and one from the prior week. These paystubs are not in consecutive order. Lenders want to see the most current and consecutive paycheck stubs. Other sources of income, like child support, alimony, social security, disability, etc., require proof of 12 months’ receipt. If you have a 1099, award letter, or two months’ bank statements showing the deposits made into your bank account, scan and submit all documents to make the process smooth. Oversharing is better than under-sharing in this case.

The third category on the loan checklist is Asset Documents. Homebuyers must provide all pages of the most recent two months’ bank statements and checking and savings accounts. Also included in this category are IRAs, 401ks, stocks, bonds, and CDs; providing this increases approval odds. All these documents may not be necessary, but it is better to be over-prepared. If you receive quarterly IRA or 401k statements, just provide the most recent statement, as it covers the two-month time frame.

Checking your credit is the next big part of applying for a mortgage. You won’t submit copies of your credit reports. Instead, the lender will request your permission to check your credit history. We are human, and mistakes happen, and life events happen. Here is a hint to make your checklist stronger. Include an explanation of any gaps in payments. A simple clarification of why the homebuyer missed the charges and what you are currently doing to ensure this does not happen in the future will give the lender a whole-person view and make the process smooth.  Homebuyers will be asked to provide all documentation of any bankruptcies, judgments, or foreclosures. Sending only one page is not helpful and delays the process.

Depending on your situation, the lender may ask for additional mortgage documents. As you review the checklist, find each document and begin organizing the files. Scan paper forms, label them with a consistent naming convention, and save them in a folder on your desktop. Use your smartphone to scan documents and create PDFs straight from your phone! If you plan to submit paper documents to your lender, make copies so you don’t hand over originals. Store the copies in one folder or envelope. Tracking down documents can take time, but doing it before you need them could help you get to the closing table faster. Having everything ready from the get-go will help you close on the home with less stress. We are always available to answer questions and help you obtain the financing you need. Reach out directly by calling 800-869-2608.