It’s time for you to do something about all your debts.

Whether it’s for convenience (to combine everything into one payment), need (because you can’t deal with the increasingly higher payments) or a combination, the next step is simple: gather all the required documentation needed to start the loan application and get the loan process rolling.

Below, you’ll see a rather comprehensive list of items you will likely need. Since the requirements change depending on a number of variables, it’s easiest just to have all these items ready to hand in along with your application.

Get all your loans together in one place.

You need to have all your loan information together for your credit cards, auto loans, personal loans, student loans and any others that you want to consolidate.  Have the account numbers, balance, interest rates and number of months remaining for each loan.  Depending on how your finance your consolidation, you may need to prioritize which ones you want to pay off first.

Income Documentation For Each Debt Consolidation Loan Applicant

If you’re paid by a salary or hourly:

• A copy of your W-2 forms from the last two years.
• A copy of your two most recent pay stubs. The pay stubs must clearly show the pay period and it must identify the name and social security number of the applicant.
• A phone number to your place of work for employment verification purposes.

If you’re self-employed:

• Copies of your full, signed tax returns from the previous two years. If you own 25% of a company, the corporate tax returns will be needed as well as personal returns. Likewise, if you own more than 25% of a partnership, complete partnership returns from last two years, as well as complete individual returns are needed.

• A signed profit and loss statement through the most recent month.

Asset Documentation For Each Debt Consolidation Loan Applicant

• A copy of each of your two most recent, consecutive, entire bank statements. It’s important that every page of both statements is included.
• A copy of your two most recent statements of other assets, such as stocks, mutual funds, 401ks, IRAs, etc. And remember, if any of the statements have more than one page, a copy of every page is required.

Other Documentation

• A copy of each debt consolidation loan applicant’s driver’s license.
• If you receive retirement or Social Security income you need to show evidence of this income – a recent check or bank statement showing direct deposit will do. Plus, you need to provide evidence of the terms of the pay plan.
• Information on your current home mortgage loan including account number, term, mortgage interest rate, mortgage servicer.
• A copy of any home equity loans or home equity lines of credit (HELOCs) you may have.
• A copy of your title insurance.
• A copy of your current homeowners insurance.
• Name and phone number of your homeowners insurance agent. Your new policy must be known and documented by your new lender.
• A copy of any Divorce Decree and Separation Agreement if divorced or separated.
• If you’ve had several jobs in the last two years, you should write a job history letter explaining the path your career has taken in recent years.
• If you are not a U.S. citizen, you’ll need a copy of your Visa or Permanent Resident Card.

At this point, you’re probably asking yourself why a lender needs all this information just for a debt consolidation loan?  Well, the answer comes down to two primary reasons:

• Protection for the lender:
  • It’s not uncommon for some borrowers to falsify documents or to just plain lie in the hope that they can get approved or simply get better terms on their debt consolidation loan. This exposes the lender to an increased possibility of loan default, since these individuals would more than likely not have been approved in the first place. In the end, lenders use this paperwork to gauge your ability to consistently make the mortgage payment on a monthly basis.
• Protection for you:
  • Documentation can serve to prevent a borrower from getting in over their head. By requiring proof of the ability to pay towards their debt consolidation loan, we keep cash-strapped individuals from spreading themselves too thin, possibly defaulting on the loan, and potentially, out of bankruptcy.

Related posts:

1. How to Erase up to $2M in Debt Tax Free – How The Mortgage Debt Forgiveness Act Works
2. 30 Year Mortgages Around 5.25% – Do You Qualify for a Mortgage Loan Modification?
3. How to Get out of Debt
4. 4.92% Mortgage Rates – How To Shop For Your Home Loan

Tagged as: Credit, Debt, Debt Consolidation

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