Buyers Beware – Mortgage Paperwork Has Increased

The amount of paperwork needed for a mortgage has increased since 2008

Buyers Beware – Mortgage Paperwork Has Increased
March 14, 2016

In 2014, the Qualified Mortgage guidelines went into effect, requiring lenders to collect more paperwork to ensure that borrowers will be able to make their mortgage payments on time every month. Those who haven’t gone through the mortgage application process since 2008 may be surprised at the new amount of paperwork that is required. The good news is that most of this paperwork is fairly routine and common sense; much of it is in place to make sure that lenders are looking at the long-term financial stability of their borrowers, rather than simply making a quick profit upfront only for borrowers to default several years down the line.

The changes mostly have to do with the amount of financial paperwork needed. Here is a breakdown of what is now required to apply for a mortgage:

  • Tax returns from the last two years. This shows that the borrower’s income is consistent.
  • The two latest pay stubs from the current employer.
  • The past two month’s financial statements – savings, checking account, etc.
  • Written proof of the borrower’s employment and salary.
  • Proof of insurance on the property.
  • A signed contract stating the borrower is purchasing the property.
  • A canceled utility or rent check if the borrower is a first-time buyer.
  • A letter from anyone who is providing the borrower financial assistance with the down payment or closing costs stating that the funds are a gift.
  • Any 1099 forms that the borrower has received from being self-employed.

Moneytips can help you refinance your existing home loan.

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Andrea | 03.14.16 @ 17:49
The more I read about home owning and mortgages, the less I wanna be homeowners.
Erin | 03.14.16 @ 17:49
So, they take an overwhelming process and make it even more overwhelming? I know they have to prove that the buyer is financially stable, but I think that can be proven with less paperwork.
Jackie | 03.14.16 @ 17:49
It is more difficult than ever to get a mortgage with all the paperwork involved. Be sure to check your credit score before applying.
Shannon | 03.14.16 @ 17:49
Having this information will be a great help in preparation for applying. Knowing all the things you need ahead of time will help speed the process up.
Tina | 03.14.16 @ 17:49
Honestly, after the Fannie Mae, Freddie Mac fiasco, this seems like a good idea. Don't lend to someone who can't afford to pay it back. All of these papers, while annoying to try to compile, are fairly straightforward and easy to obtain as the article explains.
Steffanie | 03.14.16 @ 17:51
Paperwork seems to be increasing everywhere. Good to have a heads up though!
trish | 03.14.16 @ 17:52
I'm so glad we are happy where we are! I thought we need a lot of paperwork when we bought 10 years ago! Holy Hannah my hand hurts just thinking of writing my name that many times
gracie | 03.14.16 @ 17:52
I was really surprised by all the information provided here! There is so much information to try and educate yourself on when buying a home. This was an excellent list of things to consider and have at hand!
Jonathan | 03.14.16 @ 17:53
Just another way for the big banks to screw us over. Thanks.
Carla | 03.14.16 @ 17:54
There was already a massive amount of paperwork. It is overwhelming but totally worth it in the end. There has to be a way to make it easier.
Carla | 03.14.16 @ 17:56
It is great to be prepared when you enter into the home buying process. I will pass this list on to my Son who is now looking for a home.
$commenter.renderDisplayableName() | 11.29.20 @ 19:29