The home loan application process has become more and more simplified over the decades. However, people still find it overwhelming to organize the required documents for the process. In this read, we are going to educate those looking to buy a home regarding the different documents and key information they need to keep in mind while applying for a mortgage.
Most of the documents that you are going to submit involve determining your creditworthiness as well as your eligibility for the home loan. The most important information needed for home loan applications is discussed below:
Income Statement with Pay Stubs
The lending institution will conduct an income verification process based on the income information that you turn in. You need to provide a copy of tax returns for the last two years including pay stubs. Lenders often create an income expense statement based on your personal needs and profile to arrive at the disposable income available to service the mortgage. The loan amount approved is based on your ability to make payments using your monthly income and the value of the home that you’re buying.
Address Proof
The lender ideally needs proof of your current residence. If you are staying at a rented apartment, you’ll need to have the address verified by the landlord along with how long you intend to stay at the current residence.
Bank Statement
Home loan providers ideally ask for a copy of your bank statement. This helps them verify your salary and also know about any other loans or debts that you’ve been servicing from your funds. You will also need to show that you have enough funds in your account to contribute towards the down payment.
Statement of Loan
If you have any other debt or loan in your name, you’ll need to submit the account statement for that loan. This helps the lender determine whether you’ve serviced the loan in accordance with the terms and if the remaining amount might affect your payments in the future.
Credit Score Statement
Each and every loan provider relies heavily on the credit score to determine your eligibility. Ensure that any discrepancies or errors are fixed before you apply for a home loan in order to increase your chances of being approved. If you have a poor credit score, you may want to hold on the application and spend a few months trying to improve your score.
These are not all the documents required but are certainly the most important.