Commonly Asked Documents For Lenders

December 29, 2021 | Posted by: Sherry Corbitt

After applying for your mortgage, there are a few documents that you need to provide before you can be approved. The documents that your lender requests ensure that you will be able to pay off this mortgage. With every mortgage and lender, there will be some variation of what is needed document-wise. Yet, the following are a few of the primary documents that most lenders will ask for.


Income
Pay Stub

One of the documents that are needed to validate your income is a pay stub. The lender will require a recent pay stub from your employment. This will provide them with valid proof of what you are making every pay period. In addition, they can establish what mortgage you can afford based on this income.

Letter of Employment

Another item needed for your income is a letter of employment. This letter offers information on the company you work for, how long you have been employed there, and how much you make. Depending on your employment and the lender, they may only require the employment letter and not a pay stub.

T1 General/T4

These documents are usually needed for income verification for a two-year average or new to your job. The T1 general or T4 will show precisely how much your salary is and what you made in the previous year. It is normal to notice slight differences in years, depending on if you worked more or less. The lender will calculate an average from the two numbers, which will become your income amount.

Notice of Assessment

The lender may also require a notice of assessment. You receive a Notice of Assessment each year, which outlines which taxes you owe are still outstanding. This document will help the lender know how much you made for that year and any tax liabilities. In most cases, the lender will either require the t1 general/t4 or the notice of assessment.

DOWN PAYMENT
Bank Statements

A lender will want to see bank statements to verify that you have enough for your down payment. They will usually request 90 days from your bank accounts, where the down payment money comes from. They will track large deposits that go into your account to ensure that it is legal. If these deposits do not have details beside them on the bank statement, the lender will ask you to confirm where they came from.

Agreement of Purchase and Sale

If you have sold your house andare getting a mortgage to purchase a new home, this document works well towards a down payment. The purchase and sale agreement shows the amount that you received from the sale of your last house. The lender can use this document as proof that you have sufficient funds for your down payment.

Gift Letter

If you do not have enough money to pay for your down payment, you can get a family member to gift you money. For lenders to know that this is coming from a family member, they will require a gift letter. This gift letter will ask for the family member's information, how much they give, and their signature.

PROPERTY
Appraisal

Depending on your mortgage, you may or may not require an appraisal to be completed. In most cases, especially with purchases, an assessment will be needed. An appraisal is when an appraiser comes to the property to inspect the house. They examine all factors of the property to ensure that there are no severe problems with the house. After the inspection is completed, the appraiser will complete a full report of the house. The mortgage borrower usually pays appraisals, and they range from $350-$700. The price will vary depending on the property size, location, and demand for appraisals.

MLS Listing

For the lender to know the property's value and establish the down payment required, they will request the MLS listing. The MLS document will provide the principal amount of the property and its value. The lender can then determine how much you will need to pay on the down payment.


These are just a few of the primary documents that lenders ask for. Understanding what these documents are can help you when applying for a mortgage.

If you have any questions or concerns about getting any documents for your lender, please reach out to me.

Sherry Corbitt, Mortgage Broker

Sources

-Gobler, Erin (2021). Here’s the Proof of Income You Need to Show When You’re Buying a House. Next Advisor. Retrieved from

https://time.com/nextadvisor/mortgages/proving-income-mortgage-approval-process/

-Kuo, John (2021). 7 Documents You Need When Applying For a Home Loan. Credit Karma. Retrieved from 

https://clovermortgage.ca/blog/loan-document-checklist-what-you-need-applying-mortgage/

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