When purchasing, refinancing or taking out equity, supporting documents are more important now than ever. Many of the regulations have changed for mortgage lending and mortgage insurance as an attempt to reduce fraud and protect existing and future home owners. Supporting mortgage documents may vary depending on the status of employment, length of employment, mortgage request, etc. These documents can be anything from job letters, to pay stubs or any existing mortgage related documents.
As a mortgage applicant, you may not understand why your broker is asking for certain supporting documents. Simply put, when a mortgage is approved, it is done so conditionally on receiving certain documents (conditions, as the lender would refer to them). These conditions must be met prior to closing or the bank has all right to withdraw its approval. These conditions must also be met in a timely manner to ensure a smooth and flawless experience; after all it would be a pain to go through the whole process only to have the bank back out for a missing NOA or paystub as an example. Job specific, tax specific or mortgage specific supporting documents are not an unusual request. It has become a standard practice to ensure that employment and income are verified before proceeding. This may be more difficult for self-employed applicants; however there are special programs to help with these scenarios. When putting a down payment less than 20%, CMHC will insure the mortgage and it is through their request that these supporting documents are needed. The bank and mortgage broker will keep them for their records as well. At the time of closing, the lawyer will also need certain documents pertaining to the registration of the new mortgage. These documents can include an existing mortgage statement, property tax bill, home insurance statement, etc. It is important that everyone does their due diligence to avoid any major issues down the line.
Brokering, lending and registering a mortgage require stringent guidelines to be followed. Without these guidelines and without meeting certain conditions, mortgage fraud could otherwise happen very easily. When being asking for these supporting documents, just understand that it is for the protection of everyone involved, including you. Also remember that your identity and personal information is protected. Brokers and banks are quite often audited to make sure they are following procedure, storing documents property and using personal information for only mortgage related purposes. It is mandatory for each and every mortgage broker to obtain a license to operate and brokerage insurance.
At Canadian Mortgage Services, we strive to ensure the mortgage process is simple and streamlined. We will only ask for what is necessary, take copies (never originals) and will use all personal information for the intention of obtaining a mortgage or other mortgage related request, but never for anything more or unrelated. That is our promise to you.