In the mortgage industry we come into contact with many clients, from different aspects of life. Standard employees, contract employees, self employed individuals, corporation owners, corporations and business for self applicants. Each one of these requires different documentation to get a mortgage prepared. Having everything ready before you apply is one of the smartest moves buyers can make, as this will ensure a smooth mortgage closing process.
At Mortgage Alliance we strive to get deals closed on time, so before an application is submitted to a lender ALL DOCUMENTATION is required up front. This will ensure that when an applicant claims they make $80,000 a year, they can verify it. I have in my experience seen clients claim $35-40,000 and their tax returns showing $7-8,000. Those deals ended up being delayed or not funded. Having everything in order prior to submission prevents these occurrences.
Here is what you will need:
PURCHASE – MANDATORY UPFRONT DOCUMENTS
- PURCHASE AND SALE AGREEMENT
-Ensure buyer’s names match application. If not, provide amendment
-Ensure seller’s names match MLS listing
-Make sure closing date matches application
-Make sure all Schedules mentioned on page 1 are included
-if there is a COF please advise us in the submission notes
- MLS LISTING
–Must be Realtor copy
-Must contain Seller’s name and expiry date
Salaried – job letter and paystub (within 30 days)
Hourly, guaranteed hours – job letter and paystub (within 30 days)
Hourly, non-guaranteed hours – job letter, paystub, and 2 yrs NOAs
Self-employed, stated – 2 yrs T1 Generals, proof of business ownership, 2 yrs Financial statements, NOA to show no taxes owing
Self-employed, qualified – 2 yrs T1 Generals, proof of business ownership, 2 yrs NOA average
Job letter must be within 30 days, be signed, have a start date and comment on client’s salary/hourly wage. Also must contain contact information for the Lender to verify the details.
Paystub – hand-written paystubs are not acceptable. Amounts must correspond with job letter. Client name must be printed on the paystub and dates must be recent. Some lenders will require 2 paystubs.
NOAs – if using NOAs to qualify income, you must use an average of 2 years line 150. If the most recent year is less than the previous year, you must use that amount rather than the average. The Hub requires a signed T1013 with all NOAs.
Proof of business ownership – Valid business license (not expired), articles of incorporation, business bank statements
Savings – 3 months bank statements for each account being used. Bank statements must have clients account number and name OR a document showing account ownership. All deposits over $2000 require an explanation and possibly proof. i.e. if client has transferred $50,000.00 from another account we will need a 3 month history on that other account as well, however if the client has payroll deposits of $3000 going into their account every other week and it clearly shows as payroll, this does not require an explanation as we see the source and consistency.
Gift – gift letter plus copy of bank statement showing gift being deposited into customer account. Gifted funds must be from an immediate family member, no exceptions. Some Lenders have a standard gift letter to be filled out, please enquire with your Underwriter.
Sale of existing property – copy of firm offer on existing. Some lenders will want a copy of the existing mortgage statement. The Lender will verify the equity in the property with the lawyer doing the sale.
REFINANCE – MANDATORY UPFRONT DOCUMENTS
- INCOME – see notes above
- MORTGAGE STATEMENT
– please ensure that client name and property address are pre-printed on the statement.
SEPARATION AGREEMENT – Necessary if client is separated to prove client earns spousal/child support OR or to prove that the client is not responsible for spousal /child support, depending on the Lender. Always required if spousal support is being used for income.
LEASE AGREEMENT – Dated, with length of lease. Must have landlord’s name and tenant’s names and outline amount of monthly rent, as well as property address. Ensure that this is signed by both the tenant(s) and the landlord(s).
VOID CHEQUE – must be pre-printed. If not, please provide a bank statement with client’s name that matches the account number on the cheque.
CONDO STRATA CERTIFICATE – need full copy including minutes
ID – photo ID can be drivers license, passport, permanent resident card. CANNOT use a Health Card.
BRIDGE LOAN APPLICATION – All necessary information is filled in and matches what was submitted (mortgage amount, sale price, property address (both new and existing), solicitor info, amount needed for bridge loan). Must be signed by applicants.
APPRAISAL – Must be prepared for the institution giving the mortgage (if not need letter of transmittal). Property address must match what was submitted. Always inquire with your Hub/Support Underwriter regarding specific Lender guidelines.
While not all of these apply to every mortgage transaction, get in contact with your agent to understand which ones you will need. Being ready and submitting a complete file will prevent last minute scrambles to find documents and fulfill mortgage commitment conditions. This is especially important for real estate investors.
For more information on the application process and getting approved email me at firstname.lastname@example.org.