Its not uncommon for someone buying a home (especially the first time homebuyer) to be overwhelmed by the amount of information and supporting documentation that is needed to buy a house. While it can be frustrating trying to remember what you did with that pay stub from 2 months ago, there are very good reasons that lenders require so much information prior to giving you a loan.The more information that you can provide to your mortgage broker will help to attain you the best rate and best financing that you are capable of receiving. There are many programs out there too for people who do not want to or can't locate all of thier information too. These programs are stated income, no doc., no ratio, and limited documentation type loans. Keep in mind though you will most likely pay a higher interest rate for one of these types of programs.
Loan officers who request large amount of information do so to protect the loan applicant and the loan application. The more information you provide to your mortgage professional, the less likelihood that your home financing would have mishaps. Uncovering undisclosed information later in the process often proves to be costly and time consuming for the borrower.
The information that you provide is generally used to check credit and find out if you can afford to repay the mortgage you are applying for. The documentation that is gathered is used to verify that the information you provided initially is accurate. Even though once you get a mortgage the lender will have a lien for your property it is costly for them to foreclose on your property and they still might recuperate the loan amount and costs. That is why banks require so much information; they are lending you potentially hundreds of thousands of dollars.
If there is any information which the loan officer should know about you, be up-front. It is his or her job to help determine what might cause a glitch during the process, and chances are it will come up at some point anyway.
Under the Patriot Act, federal government also requires loan originators to review and document at least two forms of ID ensuring that you are who you say you are. Usually your drivers license and passport will suffice.
Banks require the information to make an educated decision on overall risk of the loan. Remember its not you who owns the home, it is the bank. The bank is holding the house as collateral with the promise of repayment by the borrower. Therefore some banks are going to want information regarding the overall capabilty of the borrower to make the monthly mortgage payment.
