When applying for a mortgage, you will need to demonstrate to a lender that you have a substantial enough income to pay off the mortgage in the future. But how exactly can you reasonably prove your income? This article will detail the methods you can use to verify your income to a mortgage lender.
Make Copies of your Records
The first step is to provide your lender with copies of your records that indicate your income. This means your two most recent pay stubs, your most recent checking account statement, your current savings account statement, and your federal income tax returns from the previous two years. This should provide your lender with enough information to accurately gauge your income and financial situations.
Debt and Loan Statements
Your income will not be the only factor that your lender will want to verify. Your mortgage lender will want to know about any debt obligations you have. As such, you should provide your lender with copies of your most recent credit card balance(s) as well as the most recent statements from any other outstanding loans you have, such as personal, auto, or student.
Provide Employer Information
Your lender may also request that you send them the information of your employer. This includes your employer’s name, your office or work address, and the phone number to the human resources department. Your lender might want to call to enquire about and verify how long you have worked there and what your salary is.
If you have Unverifiable Work
Many people who apply for mortgages have not been in steady employ in recent years. This can make getting a mortgage more difficult, but by no means impossible. If you have been in and out of work, have been working as a freelancer, or are self-employed, then you will have to take some extra measures to demonstrate your income. This usually means providing your lender with copies of more years’ tax returns, such as four or five. You may also want to provide bank statements going back several months or years.
Most Importantly, Be Honest
Remember, while it may be tempting to try to exaggerate your income in order to impress your prospective lender, this will ultimately only hurt you. Any competent and ethical lender doesn’t want to give you a mortgage you can’t repay and drown you in debt. Financial honesty and responsibility are always prudent.