Prepare your paper work
Getting approved for a mortgage is more challenging today than it was five years ago. Qualifying requirements have changed and there is more emphasis on making sure that information in your application is verified. If this isn't your first mortgage, don't be surprised if you're getting asked for documents that you didn't have to provide before. While each mortgage situation is different and requires different documents, there are some standard verification documents that are common to every mortgage approval.
Here are the ones most commonly requested;
Credit Report: Normally, the mortgage professional you're working with will order your credit report and submit it to the lender with your mortgage application. It is rare for the lender to accept a credit report provided by the borrower that they ordered themselves.
Down payment confirmation
A lender needs proof that you have the down payment. If the money is coming from your own funds, then the lender needs a 3 -month history via bank statements or statement of investments if using GICs and RRSPs. If there is a large deposit in your account within 90 days, an inheritance for example, then lenders will need to know where it came from and require verification. If the funds were gifted to you, they require a gift letter from an immediate family member.
You will normally have to provide your two most recent paystubs, a Letter of Employment and in some cases your last two years of tax returns. As well as NOAs to confirm no outstanding taxes. If you are self employed, you'll need to provide the last two years of tax returns, NOAs to confirm no outstanding taxes and depending on the lender, invoices, and bank statements.
Lawyer Contact Information
If your lender requires a lawyer to close your mortgage, you will need to provide the contact details including name of law firm, phone number, fax number, office address and email. Some mortgage transactions such as refinances can be completed without a lawyer; instead it will be facilitated by a title closing company.
Existing Property information
If you are on the title of any other property, you will need to have documentation to confirm the monthly costs related to that property.
Agreement of Purchase and Sale
If you are purchasing, this agreement is required along with the property's MLS sheet. Your realtor will draw up the agreement. If there are any conditions such as subject to financing or subject to the sale of your existing home, then the lender will need confirmation the those conditions are lifted. Your realtor will provide those documents.
Property appraisals are becoming more common these days. The lender wants to know the real value of the home, independent of its listing or negotiated price, to compare against what you've agreed to pay to make sure the house is actually worth the money they will be lending you. This is a cost to you and depends on the property and region.
Working with a Mortgage Professional...
Of course there are exceptions and unique
situations. An experienced mortgage professional will guide you through the
mortgage process. They have developed
relationships with lenders,and therefore, are equipped to work with lenders on your
behalf. By working with a licensed mortgage professional, you have a trusted adviser and problem solver.