Mortgage Documents – What you need to provide
So you have bought your first house and now you need a mortgage. You find a qualified Mortgage Broker in your area and he gets you a great rate……what’s next?
Well, the lenders are going to require proof that everything you told them about yourself is true. The world would be a much simpler place if they would just take our word for it, but unfortunately life isn’t that easy. But don’t worry, most of the documents you need to provide are quite easy to find. Keep in mind this post is dealing with a purchase, but you will most likely need to provide the same pieces of information for mortgage refinances and renewals.
Proof of Income
Your income is obviously one of the main things the lender needs to feel comfortable with before they hand over their money. They want to be sure the income on your application reflects reality and you are not going to default on the mortgage.
Salaried employees will need to provide a job letter from there employer as well as 1 or 2 recent pay stubs. If a large portion of your income is comprised of bonuses and you need to count those bonuses in order to qualify, the lender will most likely want to see your 2 most recent Notice of Assessments to see the total income you claim.
If you are self employed you will most definitely need your 2 most recent Notice of Assessments as well as proof that you are self employed in the form of GST/HST returns, articles of incorporation and/or business licence. There are actually a couple of different mortgage types a self-employed individual can get. One involves using your actual income and the other involves stating your income. I will get in to more detail in a future post on these types of mortgage.
Proof of Downpayment
The lender is also going to want proof that you have the money available to pay for your down payment. Also keep in mind most lenders will require proof that you have money for the closing costs for an amount of 1.5% of the purchase price. Be ready to provide 3 month’s worth of bank or investment statements showing the money has been sitting in your account. If it is gifted from a family member you will need to provide a gift letter as well as proof the gift has been deposited in your bank account and is available to use.
You will also need to provide a void cheque for the account you wish your payments to be withdrawn from. One of the most common situations I run into is young couples buying their first home and planning on opening a joint account. Keep in mind the lender will not accept a cheque that does not have your name and address printed on it. I have yet to get them to accept one of those blank cheques you are issued when you get a new account. Plan ahead and open that account as soon as you start seriously looking for your house.
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