Will I have to show proof of income? Assets? Employment?
As mentioned before, there are different programs which will require different levels of documentation. Generally speaking, the more documentation you provide the lower your interest rate will be. You will also find that other program parameters are more lenient if you provide full documentation. For instance, the credit requirements will be lower and the maximum LTV may be higher.
There are three basic types of documentation that may be required. Each lender has slight variations on these themes but this will give you an idea of the documentation that will be required:
Full documentation
(Verify income and assets)
Two recent pay stubs
Two years tax returns and W2s
Two months bank statements
Most recent quarterly statement for investment accounts
CPA letter if self-employed
ID – (driver’s license etc.)
Stated
(Verify assets. State income but must be ‘reasonable’ for line of work)
Income
Two months bank statements
Most recent quarterly statement for investment accounts
ID
No documentation
(No asset or income verification required)
ID
In most cases, regardless of the type of documentation required, employment verification will be required. Most lenders prefer to see some degree of employment stability – ideally, the borrower should have been in the same job, or at least the same line of work, for at least two years without any gaps in employment.
Will I have to pay a penalty if I re-finance and pay off my current mortgage early? Can I refinance an investment property or second home?