When you are applying for a mortgage, there will be a significant amount of paperwork that must be provided and prepared for your lender. While each lender may have specific documents they require for their company, every lender will require the following documents.
• Pay Stubs. You will need to provide current pay stubs to prove that you are actively employed. In most cases, the lender will require pay stubs for the last four weeks. However, some lenders may require up to three months’ worth of stubs to show that you are actively employed.
• Bank Statements. Bank statements showing all of your banking activity for the previous three months is pretty standard for all lenders. They want to see how your savings and money flows each month.
• Investment Documents. If you have any investments, you will need to provide a current statement showing how much your investments are worth.
• IRS Form 4506-T (Tax Information)- Your lender will require that you prepare two IRS 4506-T forms with your initial mortgage application. This document allows the lender to obtain your previous tax records to verify income.
What You Must Know About IRS Tax Form 4506-T
Form 4506-T gives your lender the authorization to obtain your tax records for several years. This has always been a requirement for Fannie Mae loans, but has now become a standard practice for all lenders. Lenders are requiring that you prepare 2 forms so that they can double check your status before closing the loan.
Because there is so much important and personal information on these forms, it is imperative that you are very careful when you are giving this authorization to the lenders. Make sure that you do the following when preparing these forms.
• Make sure you specify what years the company has the right to request. There is an area that will allow you to determine that it is only the previous three years. Without this, the lender could pull records on you that are not even relevant.
• Make sure that you date the forms when you sign. The IRS will only approve of transmitting the records to the lender within 60 days of your signature date. Many lenders encourage you not to date the form so they can request the documents at their convenience. This is not a good idea. 60 days from the time you sign the document is sufficient time for them to request the records. If you do not date it, there is a chance that these records could later be requested for non-loan purposes.