Proper paperwork preparation can save you time and
get your mortgage approved faster
When it comes to applying for a mortgage, this is the second question I hear the most often, after ‘what is your best rate?’ As not every mortgage is alike, neither are all the requirements. Having said that, there are some documents that every mortgage approval requires and below is a list of the most commonly requested ones.
- Credit documents
Usually 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 a lender to accept a credit report provided directly by the borrower that they ordered themselves. If you have a limited credit, your lender may allow you to provide an alternative credit source history such as a letter from your landlord confirming no missed rent payments, or confirmation of some other form of monthly payment that you’ve been making for 12 months or more, such as car insurance or a cell phone bill.
If you have bruised credit showing collections or bankruptcy, don’t be surprised if a potential lender requires confirmation the derogatory debt has been cleared up.
- Purchase contract
This document is usually only required by the lender when purchasing a property or under a special program. Ensure the offer to purchase documents are clear and easy to read as your lender will require a legible copy for their file, and often after faxing back and forth for changes and initials, they are difficult to read. In this case, I may suggest also providing one of the earlier versions of the offer to the lender for clarity. Some lenders also request confirmation you have removed all conditions that were included in the contract such as a financing or inspection waiver. The lender will also require the MLS which provides the property details.
- Downpayment confirmation
This documentation requirement varies depending on the source of your downpayment funds. For money you have saved over a period of time, the most recent 90-day transaction history is usually required. Do ensure you can also provide details and history of any large deposits made into that account during that period. Most lenders will not accept documents where anything is “blacked out,” and you must also ensure you confirm ownership of the accounts by providing both the account numbers and names for those accounts. For gifted funds, expect to provide a gift letter from an immediate family member as well as proof the funds have been deposited to your bank account. There are other eligible sources for downpayment and I encourage you to speak with your mortgage professional about the specific document requirements.
- Income confirmation
The exact requirements depend on how you are employed; however, you can expect to be asked for some sort of documentation to verify you can make your mortgage payments. Requested documents differ for borrowers that are employed versus self-employed. For employed borrowers, you will be asked to provide a job letter and recent pay stub, and you also may be asked for the last 2 years Notice of Assessments or T4’s if any over-time income is required to qualify.
For self-employed borrowers, the document requirements vary depending on the lender you are working with as well as the program you are being approved under. Do keep in mind that the programs available for self-employed individuals vary with the different lenders and if one lender declines you, another one who has different rules may very well approve you. Also be advised, a good majority of the programs for the self-employed request you to confirm you have no personal income tax owing to Canada Revenue Agency for the previous tax year.
- Proof of Identification/Social Insurance Number
Technically you do not need to provide your Social Insurance Number to the lender, they should be able to obtain your credit report based on birthdate and address information. The same applies to identification, it is usually not required at time of application, but may be required at the lawyer’s office.
- Separation/divorce documents
If there is any possibility of child support or alimony on an application, either receiving or paying it, a separation or divorce agreement will likely be required. If this is not available, some lenders will allow a statutory declaration to be signed at the lawyer’s office instead.
- Lawyer contact info
If your mortgage lender requires a lawyer to close your mortgage transaction, you will need to provide the contact details of whom you want to work with. Contact information includes law firm, phone number, fax number, office address and email address. Your realtor, lender or mortgage broker can refer you to a lawyer they know and have worked with if you don’t already have one. Depending on the purpose of the new mortgage, you may be able to work with a closing service in lieu of a lawyer at a reduced cost.
- Existing property information
If you are on the title of any other property, you will likely have to provide documentation to confirm the monthly costs related to the property (s). As you own it, or even a part of it, you are ultimately responsible for 100% of its costs. These costs include the mortgage payment, property taxes and condo fees if applicable. If it’s a rental property, you could be asked for a copy of the lease agreement or your recent T1 general including the rental schedule.
The above list details the most commonly requested documents I see on mortgage approvals these days. Of course, there are exceptions to the norm. I can’t emphasize enough how much benefit you can get from working with an experienced mortgage professional of your choice. Not only can they guide you through the mortgage process, they can also work with you and the lender to come up with reasonable and attainable document requirements, or an acceptable alternative that works for all parties.
For all of your mortgage needs, contact Jackie at 780.433.8412 or firstname.lastname@example.org. Stay in the loop by following on Twitter @Mortgagegirlca.