Being prepared for your mortgage application speeds up the mortgage approval process. Getting pre-approved for your mortgage is a vital first step.
The application process is admittedly longer than what it is for other types of credit such as credit cards, personal loans and auto loans. That’s because mortgages require a significant amount of documentation and third-party verification, as well as the fact that they are legally recorded instruments. Both put burdens on the mortgage process that require a certain amount of time and effort to complete.
But you can speed up the mortgage approval process by being cooperative by providing any documents that are needed. A well-prepared borrower can chop several days or even weeks off the approval process.
Preparation for the Mortgage Application
There’s no getting around the fact that a mortgage application is something of an examination process. Whether you complete an application online, or you do it in person with a mortgage broker, you will be required to provide a considerable amount of information.
That will include personal information, such as your name, address, birthdate and social insurance number. The application will also require information on both your employment and your income. And naturally, you will be required to provide asset and credit information.
You should think of this almost in terms of what will be required to fill out a job application and prepare accordingly. That means being ready to provide information regarding who, what, where and when?
For example, mortgage application – employment information. You should be able to provide the name, address and phone number of your current employer; your date of hire, your specific position, and your income. You will also need to provide similar information for previous employers, going back for at least three years.
For assets, you should have copies of recent bank statements, investment accounts, and retirement accounts.
Your credit information will come largely off of your credit bureau report, so the requirements here will be minimal. But you should have the name and account number for your current mortgage available since that information is not always readily available even on a credit report.
You should complete all required spaces on the application. Anything that you leave blank will bring questions later, and slow the process.
Have Explanations for Anything Unusual
If there is anything unusual with your current situation, it will help to include transparent explanations. For example, you should have explanations for any major credit events, such as bankruptcies, foreclosures, late payments. If there is anything strange about your income (commission, bonuses for example) with your employer, you should include a brief note to explain it. That will help the mortgage broker to know exactly how to proceed.
If you have cosigned any loans for a third party, you should be prepared to document that the other party is primarily responsible (if you want the loan excluded from your qualification). You can often accomplish this by providing copies of cancelled checks for the past 12 months, indicating that the other party has been making payments on that particular credit.
Have All Necessary Supporting Documents
There’s no getting around the fact that the mortgage application process is document intensive. You should be prepared with a laundry list of documents to support the major information provided on the loan application.
This will include:
- Copies of your most recent two pay stubs,
- Job Letter from your current employer which states your position, when you started and salary confirmation,
- Provide the first 5-pages (called the jacket) of your T1 General for the past tax year,
- Notice of Assessment (NOA) from the current tax year,
- Copies of the last two years income tax returns if you are self-employed, have business income, commissions, or significant investment income,
- Copies of the purchase contract on the house you’re purchasing,
- Current home mortgage statement if you are refinancing,
- Copies of the most recent statements from bank accounts, investment accounts, and retirement accounts,
- The name, address, and account number for your current mortgage, or landlord and contact information if you are a renter,
- Copies of leases on investment properties along with a statement of rental income from your tax returns,
- Donor information if you will be receiving a gift for the down payment on the new home
The more documentation that you have when completing the mortgage application, the more accurate the application will be. Meanwhile, you will be able to turn over those documents to the lender so that they will have them for verification purposes.
Providing timely and accurate documentation is probably the single best step you can take to speed the mortgage approval process.
Respond Quickly to Additional Information Requests
No matter how thorough you are in providing documentation up front, there will almost always be requests for additional documentation. Sometimes this happens because you forgot a document, and others because a situation arises that simply requires more clarification.
When you get such requests, respond to them, and do it as quickly as possible. Every request for documentation in the mortgage application process represents a potential delay. The sooner that you can provide the lender with the information that they need, the faster the process will go.
Recognize that the Mortgage Broker, Lender and Underwriting Team is on Your Side
While it can sometimes seem that the documentation requests are on the intrusive side, it’s important to understand that mortgages are legally created arrangements. And they also have substantial documentation requirements by the lenders and investors who ultimately fund your mortgage. Your full cooperation will make the whole process go quicker.
It’s also important to understand this limitation when the requests for information and documentation are coming through. The mortgage broker who is contacting you for documentation isn’t doing it to make your life miserable. They’re trying to get your mortgage approved, but need help getting it done. After all, no one knows your situation better than you do!
By providing the necessary documentation, and doing it as quickly as possible, you are helping your cause. Every piece of information that you supply moves your approval and closing day ahead. Think of it that way – and be proactive – anytime the phone rings or an email arrives with yet another request for more documentation.