The days of stated income loans are likely behind us. It is rare - but not completely unheard of - to find a mortgage bank that is willing to lend to borrowers that are not able to verify their income with tax returns or pay stubs. These so-called “liar loans” were commonplace in the pre-housing bust market, but are now looked at as a way for unqualified borrowers to get loans that they really cannot afford.
The moral of the story? Come prepared to verify everything you put on your mortgage application or run the risk of a delayed closing (or in some cases, an outright denial).
Although it may seem like your friendly neighborhood loan officer is asking for a ton of documentation, being prepared can make the whole mortgage process a lot easier if you are able to provide them with everything they need right off the bat. So let’s get down to business. Before you apply for a mortgage you should have the following documents ready to go:
- If you collect a paycheck, W-2 forms from the past two years.
- If you own your own business, 1099 forms (Profit and Loss Statement).
- Pay stubs for the 2 most recent pay periods.
- Federal tax returns from the previous two years.
- A complete list of your assets. This includes bank statements, mutual fund statements, real estate and automobile titles, and records of other investment assets.
- Canceled checks for your rent or mortgage payments.
While this list may not cover everything your loan officer will ask you for, it will certainly get you ninety percent of the way there. And to top it off, your loan officer will appreciate the fact that you made his or her life that much easier. Hey, maybe the bank will even give you a break on your interest rate for being such a savvy mortgage shopper.