Documentation of Your Mortgage

Nobody truly looks forward to acquiring a mortgage. Besides the cost, there are other hassles that can be frustrating. One of these annoyances is all of the paperwork that must be obtained, given to the lender, processed, etc. For many people, this is the worst part about getting a mortgage, while other individuals may not be bothered by it. That being said, most lenders offer a plethora of documentation options. These options range from “Full Documentation” to “No Documentation” AKA “no-doc” mortgage.
Generally, the more documentation the borrower provides, the cheaper the mortgage, and as the documentation requirements shrink, the price goes up. In a “Full Documentation” mortgage, the borrower provides paperwork showing income from the last 2 years resulting from one job or business, and that money is satisfactory to quality for the loan. In a “No Documentation” mortgage, the borrower either doesn’t have the qualifying income or cannot provide information about previous jobs or businesses. These “no-doc” mortgages are usually more expensive than their “Full Documentation” counterparts. Not everything is black and white, however, and there are a number of options that require less paperwork than the “Full Documentation” mortgages. These may be necessary for individuals who have been promoted, have two or more sources of income, cannot meet lender standards, cannot document various assets, etc.
These documentation options also dictate exactly how the income/employment can be used by the lender and whether or not it will be verified. Just ask yourself: how much of a hassle is providing documentation? If it’s worth it to you, then go with one of the options that has fewer paperwork requirements, in exchange for that higher mortgage price. If your income qualifies you, yet you really need to save every dollar, go with the “Full Documentation” option. Whatever you decide, make sure that it is your decision, and not the lenders. Some may wish you to pick a lower documentation option so that there is less paperwork for the mortgage lender to do.