Having these 5 mortgage documents on hand before you apply can streamline the approval process and make it easier to buy a home

Purchasing a home or commercial property is a major step in anyone's life because it can help set you up for the future. The process can also be overwhelming because there's so much paperwork to read and sign. 

For starters, there are all sorts of mortgage documents you'll need to sift through because your lender will want tons of information to verify you can repay the money. Begin gathering this documentation before you apply to save time. 

From there, the lender will need to see some legal documentation before providing the funds for the sale to finalize. 

Here's a look at five mortgage documents you'll need to produce before buying a residential or commercial property in Florida.

Key Takeaways

• Buying a home involves significant paperwork
• Gathering the documents before applying can save time
• Some legal documentation is necessary
• Using an attorney can ease your mind

1. Mortgage application form

The first thing you'll have to present to a potential lender is a Uniform Residential Loan Application. Every borrower is responsible for filling out this document, which includes personal and financial information that you'll have to disclose for your application to proceed. 

Your mortgage application form acts as an introduction to your lender by providing some basic information. From there, you'll have to verify what you're telling the lender with supporting mortgage documents.

2. Proof of income

The first supporting documents you'll require are for income verification purposes. Proving your income ensures the lender that you can afford to repay the loan and have a stable and consistent income that's likely to last for years.

The lender will start by wanting to see your W-2 forms from the last one or two years. If you don't have access to these forms, ask your employer for a copy. There could also be a copy of the W-2 included with your tax documents. 

Your lender might also want to see a pay stub from the last 30 days to verify that you still work at the same place and are making the same amount of money. These stubs are often available in paper and electronic form, and there's a chance the lender will want your employer to sign the document if you're submitting a paper copy. 

There's a good chance you'll have to produce some income tax forms as an additional method of verifying your income and deductions. Once again, the lender will want to see at least a couple of years' worth of income tax documents and might want you to sign IRS Form 4506-C to access your tax transcript.

Borrowers who rely on child support or alimony income will have to prove they expect to continue receiving this money for at least the next three years. You can use a copy of the court order as proof. 

If you're a freelancer or independent contractor, documents like current contracts, a business license, a cash-flow analysis form, a profit and loss statement, and federal tax returns could be necessary. It'll all depend on the nature of your business and how you earn income. 

3. Debts and assets

Once the lender verifies your income, the next step is to calculate your debt-to-income ratio to see how much you can safely borrow. On your mortgage application, you'll have to list all your monthly debt payments, including current mortgages, car payments, student loans, and credit card balances. The lender will then ask to see proof. 

For starters, you'll have to provide bank records showing you can afford your down payment and closing costs while keeping some money in reserve. Two or three months' worth of statements should suffice. 

If you're using money from an investment or retirement account to cover some of your closing costs, you'll have to provide statements from those funds, as well. 

Finally, some lenders will allow you to use gifts from family members for covering your down payment and closing costs. You'll have to disclose that you'll be receiving the money in this way and present a letter stating that repayment on the gift is not necessary.

4. Credit information

With your finances in order, credit verification becomes a priority for lenders. You won't submit copies of your credit report but will grant the lender permission to access your credit history. 

Keep in mind that while some negative data on your credit report is perfectly normal, multiple collections, late payments, and judgments could make it more challenging to secure a mortgage. The lender might want you to explain these items before continuing. 

Your credit score is also important and will influence the interest rate the lender provides. A better credit score will secure you lower rates. There's also a minimum credit score you'll need to qualify for the loan.

5. Legal documents

Before finalizing your loan, your lender will need to see legal documents regarding the property you're purchasing. For example, a copy of the purchase agreement should be signed and presented to the lender, as it shows the acquisition price and other information. 

You'll want your attorney to go over these legal documents before you sign anything to ensure everything is written up in a way that will leave you with the deed to the home when all is said and done. Most lenders are on the up and up, but getting the necessary legal advice remains essential.

Hiring a real estate attorney

There will be countless documents to sign as you move through the process of securing a mortgage and purchasing a home, but seeking the advice of a trained professional can ease your mind. A good real estate attorney will walk you through everything. The more you understand about these mortgage documents and what they mean, the less worry you'll have as the deal finalizes.

PeytonBolin is a full-service real estate law firm operating out of Fort Lauderdale, Florida. Our team handles residential and commercial closings, ensuring you have guidance as you purchase a home. Contact PeytonBolin today for assistance navigating your mortgage documents.