5 Situations Where You'll Need to Submit Extra Paperwork with Your Mortgage Application

It can be snap rounding up documentation for a mortgage. Or it can seem like a nightmare of cat herding a ton of unrelated paperwork. The documentation required for a home loan is guided by the financial and credit conditions of the borrower. Mortgage application requirements typically include two years of tax returns, asset documentation and W2 forms. Expect to provide lenders with at least a month of pay stubs.

During the application process, the loan officer provides the borrower's documentation for the underwriter. Having the paperwork on assets, liabilities, and credit history prepared ahead of time can speed the time to approval.

The process gets more complicated when the applicant:

  1. Has a previous bankruptcy, foreclosure or short sale on the books
  2. Is not a U.S. Citizen
  3. Is divorced (and has alimony or child support income)
  4. Has had a previous loan modification
  5. Is self-employed, paid on commission, or has undocumented income

Paperwork for Foreclosure, Bankruptcy, or Short Sale

Depending on the lender, loan applicants may need to provide court documents, credit reports (showing improvement) and deeds. Applicants with a foreclosure will need a trustee's deed indicating the sale date. Those with bankruptcies (Chapter 7 or 11) should round up all documents, including schedules itemizing the creditors and date of discharge. The lender may ask for a personal statement of the reasons for the bankruptcy. Applicants who have been through a short sale need to provide lenders with documentation of the final settlement.

Lender Requirements for Non-Citizens

Underwriters generally ask for birth certificates from non-U.S. citizens or from applicants who do not have a photo I.D. Non-citizens must document legal residency status. Not having appropriate identification may not be a show stopper, but it can tie up the process.

Documents for Divorced Applicants

Lenders will need a copy of the divorce decree no matter how long ago the applicant legally separated from a spouse. Any money related assets must be fully documented, including any that are received as child support or alimony (cancelled checks). Divorced applicants may consider themselves currently single, but legal evidence of the divorce will show up when the underwriter goes to work.

Providing Details on Loan Modifications

A loan modification may be the last attempt to stave off foreclosure. If the applicant has had a forbearance or repayment plan, the new lender wants a look at the modification agreement approved by the loan servicer.

Documenting Income

All applicants will need to document all their assets, including investment accounts (IRA, money market, stocks). Often the lender will tell applicants what to provide. In the case where there is no paper trail for income beyond tax returns, pay stubs and W2 forms, the lender may ask the applicant to fully document it. Electric statements may suffice.

Lenders don't necessarily need all the minute details of an applicant's life, but having the required documentation on hand can save wear and tear on your nerves. Once you're ready to move ahead, compare mortgage offers for free at LendingTree.

And finally, here's a quick checklist of common documentation types:

  • W-2 Forms
  • Bank statements
  • Pay stubs
  • Tax returns
  • Cancelled rent checks (for first-time home buyers)
  • Proof of citizenship or legal residency
  • Photo identification
  • Paper trail of funds
  • Proof of military service (if applicable)
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