What's the most stressful part of arranging a mortgage?
From my experience as a mortgage broker, working with borrowers over the years, it seems the gathering of the documents required by the mortgage lenders causes the most hair loss and eye poking. It’s always frustrating when you have to run from here to there gathering paperwork for any reason - it often feels like those dreams where your legs are made of lead and you can’t seems to get anywhere fast. However, a little forethought can go a long way to making things less stressful when you finally find your perfect home.
Here are four typical documents that most Alberta mortgage lenders require in order for you to prepare your plan of attack:
- Letter of Employment
- Notice of Assessment
- Proof of Down Payment
- Personal Identification Documents
What are these documents, and why do mortgage brokers need these documents?
Letter of Employment
This letter provided by your employer confirms where you work, your position and how much you are paid. It will need to be on company letterhead and should state your position, your start date and your salary or hourly wage and guaranteed hours. Also, the letter should state any guaranteed bonuses you are entitled to. Lastly, it should include the writer’s name and contact information so that the information in the letter can be verbally verified. Be sure to talk to your mortgage associate about any non-guaranteed hours or bonuses you may have.
These come along with your paycheque each month and display your name, address, year-to-date earnings and deduction. Many people throw these away, (they do tend to pile up) but if you are starting to look for a home, get in the habit of saving these. Some lenders will only require your most recent paystub but others may require multiple so it’s a good idea to have a number of them on hand.
Notice of Assessment
Often referred to as NOA’s, these are the blue documents sent to you by Revenue Canada after you file your income tax. Their purpose it to confirm your reported income each year. Mortgage Lenders may require up to three years of NOA’s in some cases so check and see if you have them on file prior to house hunting. If you do not have them, you can have Revenue Canada send them to you but beware - they will only MAIL them to you, and the process can take up to 10 days.
Proof of Down Payment
If your down payment money is in your bank account, you’ll need at least three months of banking history documents that also state your name and your banking institution (print outs from your bank machine won’t work here). If it’s a gift, you’ll need a letter from your gift provider (who must be a parent or sibling) and proof of the deposit of those funds into your account.
Mortgage down payment documents can end up being the most complicated paperwork because often the funds come from many sources. The best way to avoid frustration is to speak with your mortgage broker specifically about your down payment well in advance of finding a house. Although these documents must be current at the time of mortgage application, having a pre-emptive discussion will allow you to prepare a plan for obtaining them in a timely manner.
Personal Identification Documents
Most mortgage lenders require you to provide copies of two forms of personal identification, or ID. They require these documents to protect against mortgage fraud and to verify the true identity of the clients that they are lending money to. One required form of ID is a government-issued document with your photo and signature; like a Canadian Passport or Provincial Driver’s License, for example. The second form of ID could be a birth certificate, Provincial health insurance card, or Social Insurance Number (SIN).
Lastly, talk to your employer and your bank about how long it may take to obtain these documents so there are no nasty surprises when the time comes. Some banks charge a fee and must send statements from previous months by snail mail (gasp!) taking up time you may not have when you are making an offer on your dream home.
As mortgage brokers we like to let our clients know that we understand that providing these documents, and often more, can be time consuming and stressful. We really do attempt to have your back and work with the mortgage lenders to ensure that any additional documents they request are completely necessary and required. Sometimes we do need to remind our clients that, often, mortgage lenders ARE lending hundreds of thousands of dollars and they’d probably like the same assurance if we were loaning someone that amount of money.