Applying for a mortgage is an extensive process that requires submitting various financial documents. As one of the largest banks in the world, HSBC has thorough requirements when it comes to mortgage applications. This ensures they properly verify an applicant’s financial situation before approving a mortgage.
This comprehensive guide will explain all the key documents HSBC requires at different stages of the mortgage application process. It provides helpful details and tips, so you know exactly what to prepare. Read on for a full overview of assembling a complete HSBC mortgage application.
Overview of the Mortgage Application Process
HSBC’s mortgage process includes two main stages that require documentation: the pre-approval stage and the final approval stage.
Pre-Approval
The pre-approval stage allows HSBC to pre-qualify applicants for a certain mortgage amount before they find a home. This requires submitting documents to verify your income, employment, assets, and identity.
Final Approval
Once you have accepted an offer on a property, final approval requires additional documentation about the home along with verification of your financial situation. This is when HSBC underwrites the full mortgage application prior to closing.
Understanding these stages helps explain why certain documents are requested at different times during the application process.
Necessary Documents for Pre-Approval
When you first apply, HSBC needs to confirm your financial standing to determine the mortgage amount you can qualify for. Here are details on the paperwork required for pre-approval:
Income Verification
HSBC will want to review documents that reflect your current income and employment status. This includes:
- Pay Stubs: Provide your most recent pay stubs covering 30 days of income. If paid weekly, submit 8–10 recent stubs.
- W-2s: Submit W-2s for the previous two years to demonstrate a history of your income level.
- Tax Returns: Include complete federal tax returns from the last two years. Returns should be signed and include all schedules and forms.
- Other Income Documentation: If you have bonuses, commissions, or income from other sources, provide documentation such as award letters, pay stubs, or tax returns.
Asset Verification
You’ll need to submit bank statements to verify funds available for the down payment, closing costs, and required reserves after closing.
- Bank Statements: Provide 2-3 months of statements for any accounts you plan to use for the mortgage. Statements should show consistent balances over time.
- Retirement Accounts: Include current statements for 401(k)s, IRAs, pensions, etc. if using for a down payment.
- Investment Accounts: Submit statements for any stocks, bonds, or other investments that will help fund the mortgage.
Identity Verification
- Driver’s License: Provide a copy of your current driver’s license to confirm your identity.
- Passport: A passport can also serve as identification if you do not have a driver’s license.
- Social Security Card: Submit a copy of your social security card, which HSBC will use to pull your credit report.
Providing these documents allows HSBC to thoroughly verify your income, employment, assets, and identity before issuing a pre-approval letter.
Necessary Documentation for Final Approval
After your offer is accepted on a property, HSBC shifts focus to underwriting and final approval. Here are the documents you’ll need for this stage:
Updated Income and Asset Documentation
Since some time may have passed since pre-approval, HSBC will want updated documentation:
- Pay Stubs: Provide pay stubs covering the most recent 30 days to reflect your current income.
- Bank Statements: Submit 2-3 months of your most recent statements to show updated balances and cash flow.
- Tax Returns: If more recent tax returns are available, submit those from the last 1-2 years.
Home Purchase Documentation
HSBC will require documentation regarding the details of the property:
- Purchase Agreement: Provide a copy of the signed purchase and sale agreement on the home. This outlines the purchase price and contingencies.
- Appraisal Report: An appraisal ordered by HSBC provides an estimate of the property’s market value.
- Home Inspection Report: If inspection contingencies are written into the purchase agreement, submit a copy of the home inspection report.
- Title Commitment: This document from the title company verifies ownership and identifies any liens on the property.
Final Underwriting
At this stage, HSBC’s underwriters will review the entire application and supporting documents. They may request additional paperwork if needed, such as:
- Gift Letters: If receiving gift funds toward a down payment, the donor will need to provide a signed gift letter.
- Divorce Decree: If applicable, submit a copy of your divorce decree, particularly details regarding home ownership.
- Rental Agreements: If the property will have rental units, provide copies of tenant leases.
Lender Disclosures
During final underwriting, HSBC is required to provide you with various disclosures, which you’ll need to sign and return:
- Loan Estimate: This outlines projected mortgage terms like rate, fees, and closing costs.
- Closing Disclosure: You receive a final disclosure three days before closing listing your final loan costs.
Submitting all documents fully and accurately ensures you meet HSBC’s approval criteria to secure financing.
Helpful Tips for Document Collection
Compiling all the required paperwork can feel daunting. Use these tips to stay organized and make the process easier:
- Create a checklist: Use HSBC’s document checklist to track what you have and what’s missing. Update it as you collect additional documents.
- Gather documents early: As soon as you start the process, begin pulling together tax returns, pay stubs, bank statements, etc. Don’t leave it to the last minute!
- Ask your loan officer: Your dedicated officer can clarify HSBC’s documentation requirements and help solve any issues.
- Photograph documents: Take clear pictures of any documents you submit electronically using a scanner app or camera.
- Keep a paper trail: When emailing documents to your loan officer, keep the emails for your records in case anything gets misplaced.
Conclusion:
Applying for a mortgage can seem like a daunting process, especially when a thorough lender like HSBC requires documentation at each step. By understanding what documents you need and when, you can avoid surprises down the road. Be proactive about collecting paperwork early and don’t hesitate to ask your loan officer questions. Keep your materials organized, double-check HSBC’s checklist, and submit documents in a timely manner.
FAQs:
How many years of tax returns does HSBC require?
HSBC asks for federal tax returns from the previous two years to demonstrate stable income sources over time.
What types of bank accounts should I include on the application?
Provide statements from any checking, savings, retirement, or investment accounts you will use for the down payment, closing costs, or post-closing reserves.
Do I need to submit each pay stub individually, or can I combine them into one document?
Submitting pay stubs one-by-one rather than combining allows HSBC to review the income details on each stub.
What happens if I’m missing a document HSBC requires?
Your loan officer can advise if there are alternative documents you can provide instead. Be proactive communicating with them about any missing paperwork.
Why does HSBC need so many documents throughout the mortgage process?
Verifying an applicant’s financial standing protects HSBC from risk and ensures only qualified borrowers receive mortgage approval. Thorough documentation achieves this.