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The documentation required for getting a loan by mortgaging property varies. If only stated income is provided, a slightly higher interest rate or fee may have to be paid. The actual documents required depend on the loan officer and the underwriter, but it is advisable to keep the following documents ready:

1. Property information

a. Purchase agreement for the property

b. If  your current home has been sold, a copy of  the settlement.

2. Income and assets

a. Pay stubs for the previous month

b. W-2’s and name, address of  employers for the last 2 years

c. Statement of bank, mutual fund or investment account for the last quarter

d. Estimated value of personal property and furniture

e. Tax returns and profit and loss account if you are self employed or own part of a business

f. For retired persons, a pension award and social security award letter is needed.

3. Debts

a. Information on all current loans including balances and monthly payments

b. Credit report information such as late payments, collections

c. Any bankruptcy information if relevant.

A copy of the photo ID card , social security card and details of  the residential address in the last 2 years are also required.

When property is used as a security for repayment of  a debt, it is called a mortgage . It widely used for loans secured to purchase residential and commercial real estate. Most home purchases in companies with a developed financial system are funded by mortgages on the property.

For most mortgages, the creditor is a bank , insurance company or financial institution who has lent the money to the property owner.  The interest rate and duration of the loan are defined at the time of the mortgage. The creditor has a legal right and  can legal action if  the loan amount is not paid on time.

The debtor is the the person who owes the loan or other obligation secured by the mortgage. If  the debtor does not repay the loan installment and interest in time, the creditor may take possession and resell the property that is mortgaged.  The debtor is usually the home owner or  a business, who has purchased the property with a loan. Since the transaction is complicated and the loan amounts are large, the services of  a mortgage broker or financial advisor may be needed.

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