With interest rates at a historic low, many people are looking to refinance their home or purchase a new one. In both cases, you will need a mortgage and need to submit different types of documents to the lender so they can approve you for a loan. We will go over the various documents needed for mortgage approval and explain why they’re important.
At Texas Trust Home Loans, our experienced loan officers are motivated to help you in your loan process, but being proactive is the best way to close your mortgage. Initially, we require you to collect your income documents and evidence of your debts and assets so that we can assess your financial position.
The loan application consists of various parts, but the calculation and verification of your income may be the most crucial. Income-related paperwork is used to determine the likelihood that you will be earning the same or more in the future. Since you’re committing to a mortgage which can last for 30 years, it is our responsibility as a lender to evaluate whether you can pay your loan for the duration of your mortgage term. If you earn wages or are on a salaried income, we could require your most recent paystubs, W2 statements, and tax returns. If you are self-employed, we’ll likely need your 1099 statements for the past year, K-1 statements (if you own part of an S-Corporation or Partnership), a year-to-date profit and loss statement, and most recent two years of business and personal tax returns.
On the other side of your income is your debt history. Both combined give us your debt-to-income (DTI) ratio, an important measure on any mortgage application. Your DTI ratio is calculated by dividing your monthly debt by your monthly income. Keep in mind that the lower your DTI, the more financing options will be available to you. The measure might seem very simple, but there are a wide variety of factors that are taken into account. Your credit report is one of the first things we look at to determine your eligibility for a loan. The report contains valuable information about your credit history like your credit score, loan balances, and payment history on accounts as well as any adverse credit events.
We will need proof of your assets as this allows us to verify if you have the funds you require for your deposit and closing. We could ask for two months of your bank statements with detailed transaction history and current balances. If there were large deposits on your bank accounts, we’ll need documentation for those transactions as well.
Once you have provided the requested documentation, a loan officer at Texas Trust Home Loans will review your application. We might need further documentation or clarification to make sure we fully understand your financial position.
This might seem daunting even if you have been through this process before. That’s why we are here to help you every step of the way. We aim to make this process as simple as possible. There is no need to mail or fax these documents; you can upload them directly online. You can also review and sign your documents needed for mortgage approval electronically
Ready to take the jump towards your new home? Apply now at www.texastrustloans.com.