A
mortgage loan is more complicated than a car or credit card
application
Since
a mortgage company must verify information more thoroughly
than the car or credit card companies, documentation of
your loan will take longer to complete. |
If
we are to have the maximum chance of getting your loan approved
in a manner that is satisfactory to you we will need a lot of
your help. Read Underwriting Standards, Processing your loan and
this section very thoroughly. The better you understand the rules
we work under, the more invaluable your assistance. Armed with
this information you will know best how to explain your situation,
who to talk with to help us gather additional information and
what type of documentation is readily available from you or your
company.
Recent
figures show that nationally almost 44% of all loan applications
are turned down the first time around.
There
are no figures on how many eventually get approved the second
or third time around. FYI FHA has the highest turn down rate.
Proper processing and presentation to the Underwriter are the
keys to an easy loan approval. (BTW our approval rate has
been over 95% since 1984) The main difference between mortgage
companies is how thoroughly they document your situation, present
you to the underwriters and get loan approval not the rates quoted
because we all dip from the same FNMA/FHLMC money well and therefore
rates can't vary significantly. The more personal questions we
ask and the more information you volunteer the better we can do
our job.
| At
FINANCIER$ Mortgage we have a subtle but significant
difference in focus. Our loan officers aren't sales people
so they focus on getting you approved for a loan, not just
getting you to make loan application as is the industry norm. |
INFO
NEEDED AT LOAN APPLICATION
download a slightly truncated,
printer friendly .pdf file
Although
different loan types require different levels of information these
are the basic requirements for a full documentation loan.
For variances in documentation required, see Processing
Your Loan.
- We
will need a signed copy of your SALES CONTRACT. We
can work off an unsigned copy, but we need a completed contract
before we can get loan approval. We will also need a copy
of the canceled EARNEST MONEY CHECK to prove you actually
paid the earnest money.
- There
is a small amount of MONEY needed prior to closing. This
is not extra money, it is part of the closing cost estimate
you were/will be given. You will need to pay for your credit
report, application fee and someone will need to pay for an
Appraisal in advance. Depending upon how the contract is written
the Seller might be paying for Appraisal.
- The
underwriter will be looking carefully at your address stability
so we need your ADDRESS history, with no gaps, for the
past 2 years including your landlord(s) MAILING ADDRESS(ES).
Canceled rent/mortgage checks for the past 12 month period eliminate
most problems that could be encountered here.
- Copy
of the last 3 months BANK STATEMENTS. (We need 2 statements
on all depository institutions that only send quarterly statements)
We need copies of all pages except the canceled checks (please
don't have any NSF checks!) The Underwriter (UW) will be looking
for your ability to manage your money and will be asking you
to document any large non-payroll deposits.
- DOWNPAYMENT,
CLOSING COSTS AND YOUR RESERVE CASH (typically 2 months
house payments) will need to be verified as being in your bank
account (see #4) prior to loan approval. If
the funds for closing aren't available at time of loan application,
please tell us so that we can hold the deposit verification
until funds are available, this could delay the processing
which would also delay closing. Bring mailing addresses,
account numbers and current balances for all Deposit Institutions.
If any portion of the downpayment or closing costs is a GIFT,
we may need to verify the gift. Gifts may seem great to you,
but an UW looks at it quite differently. To an underwriter it
is proof you couldn't mange your money well enough at your old
house payment and debt load to live and save the necessary money.
UWers are paid to wonder how well you will be able to manage
the new (probably higher) house payment. In other words, the
UW will view a gift as a negative and look more carefully at
your income and credit history. If you are weak in one area
you must be strong in all other areas.
- EMPLOYMENT
(& income) Once again stability is the main factor
so furnish information for the last 2 years, with no gaps, along
with employer MAILING ADDRESSES.
- Present
MONTHLY INCOME. We need your most recent, computer generated,
paystub showing Year To Date income. (don't get a computer
generated pay stub with YTD info? - call us there are alternate
verifications) We will also need all paystubs dated within
30 days of closing so copy and send us all check stubs as you
receive them. The UW will be looking for the "consistent"
income stream that is available to pay the "consistent"
house payment so lets look at the documentation needed on different
types of income.
TYPES OF INCOME:
HOURLY & SALARIED - please furnish copies of your
W-2s for the last 2 years (one to a page). We can definitely
count as consistent income whatever your company verifies as
your minimum work week or base salary. Anything else may have
to count as Bonus or Overtime.
COMMISSIONED - FNMA/FHLMC both require complete tax returns
for the last 2 years (with an original signature so sign
a copy in blue or red ink). We will need to establish the
"regularity" of your income stream. If you have high
enough credit scores and have good money & stability factors
we can usually delete the need for tax returns. There
are financing&/ or processing types that do away with this
requirement altogether.
UWers are looking for an income STREAM, not isolated events
so typically they will look favorably on minimum income figures
instead of the maximums (remember the UW is looking for the
consistent portion of your income that is available
to pay this very consistent house payment). A 2 year average
is the preferred figure to use. There are alternate financing
types that do away with this requirement.
SELF-EMPLOYED - please furnish complete personal tax
returns for the last 2 years (& possibly corporate returns
if you own 25% or more of the company) plus a current P&L
statement and balance sheet prepared by an accountant. (as a
general rule of thumb only the Adjusted Gross Income [line 31
of your tax return] will count towards income qualification.)
We can add back in any write offs that were not actually out
of pocket expenses or one time expenses such as Depreciation
&/or Computers. If you have high enough credit scores and
have good money & stability factors we can usually delete
the need for tax returns. There are
financing &/or processing types that do away with this requirement.
BONUS/OT - your Bonus/OT income figures will be averaged
unless your company will report a definite bonus/OT figure for
future income or show that your bonus/OT has been changed and
will guarantee the higher figure. For a bonus to qualify as
income, the manual says the bonus cannot be based upon performance
or company profits. Both Bonus and OT income must be stable
and recurring to count as qualifying income. The ideal bonus
will be paid monthly, have a history and be guaranteed. With
proper documentation even a less than ideal bonus/OT income
can be counted.
SECOND or PART TIME JOBS - due to the fact that a 2nd
or Part time job is not the norm the UW will want you to have
a minimum of 1 year on the PT job plus have a history of working
a 2nd or part time job. Even with this history many times they
still may want to only count a percentage of your PT income.
Look at it from their perspective, the house payment will go
on for 30 years, will your PT job?
ADDITIONAL INCOME - bring proof of this income along
with the terms of continuance. The UW will be looking for proof
this income will last 3 years or more.
INTEREST or DIVIDEND INCOME - the UW will need to see
a 2 year average from your 1040. Is any of this money to be
used for your downpayment? If so this income will need to be
reduced accordingly.
RENTAL INCOME - The Underwriter knows there are expenses
to owning a rental property therefore to arrive at the net qualifying
income they will count only 75% of the income and subtract 100%
of the PITI payment. We will need a copy of the lease.
EXAMPLE:
$1,000 monthly income X 75% = $750 - $620 PITI payment = $130
net rental income. Alternatively you can furnish 2 years tax
returns showing a higher income, but once you do that any information
on your tax return is part of the loan. This is usually not
a good thing!
CHILD SUPPORT must be able to be documented. Documentation
is usually canceled checks or court records. Needs to continue
for 3 years or more.
NOTES RECEIVABLE - We will need a copy of the note evidencing
a minimum of 3 years remaining and evidence that the income
has been received for the past 6-12 months.
- To
verify the accuracy of the credit report (most are wrong) (see
also Credit Reports & Scoring)
we need a list of your CREDITORS along with mailing addresses,
account numbers, minimum monthly payments and balances. Copies
of your last month's statements are the ideal way to furnish
this and answer any questions that may arise. FYI: people
tend to forget them, but LOANS AGAINST YOUR 401K COUNT AS A
DEBT and will affect the amount of loan you can qualify for.
If
applicable, we will need complete copies of bankruptcy papers.
We may also need copies of divorce decrees if either party has
had a divorce. This would show any contingent liabilities such
as child support and, hopefully eliminate problems arising from
erroneous credit reports.
Just for your information, Installment loans with less than
a 10 month balance do not have to be counted as a debt on Conventional
loans, but you must count all Revolving accounts even if they
are paid off monthly. FHA counts Installment debts unless they
last less than 12 months and the payments are less than $125
which can be a significant detriment when compared to Conventional
guidelines and with FHA you must count all Revolving accounts
even if they are paid off monthly.
- Show
your ABILITY TO ACCUMULATE WEALTH & MANAGE MONEY
with:
Estimate the replacement value of all household goods and personal
items. (a good starting place is $4,000 per room, or in other
words, the cost to buy not the garage sale value. Don't forget
your closets and the garage!)
Make, model and present value of all vehicles owned including
boats and motorcycles.
Bring copies of titles if they are less than 3 years old and
owned free and clear. Leased vehicles count as a debt, but not
as an asset.
Face amount and cash value, if any, of life insurance.
Name, quantity, identification numbers and cash value of all
stocks and bonds.
Statements on IRA's, Keogh's, 401k's as well as retirement funds
and the % vested.
- Information
on all OTHER REAL ESTATE owned. (mailing address, mortgage
balance & loan numbers)
IMPORTANT!
There are 4 requests
we need to make of you:
1.
Please pay all your bills in a timely manner!
A late payment at this stage could cause your loan to
be rejected!
2.
Do not make any new loans or charge on existing creditors!
A new loan or an increased loan balance at this stage
could cause your loan to be rejected! Retire your credit cards
until after your home loan closes. If closing funds are tight
be especially be careful of 30 day accounts such as American Express.
If you absolutely must make a large purchase please talk to us
beforehand.
"No
payments till. . . " loans are reported to the credit
bureau as active loans with payments. Therefore they count as
debts and affect your qualifying ability.
3.
DO NOT GO OUT & BUY FURNITURE!
Many times we have seen people buy furniture or put it
on layaway only to find they do not qualify for their new home
with the additional debt. You will have years and years to buy
furniture after you are in the house.
4.
DO NOT CHANGE JOBS! EVEN FOR A RAISE
A job change shows instability. Talk to us BEFORE you
even consider a job change. It might be OK, it might be DISASTEROUS!
Additional
VA needs:
dd214
& Certificate of Eligibility
Information
on PREVIOUS VA LOANS. You will need to furnish information
on terms of sale, date and, if sold on assumption, the name &
addresses of purchaser and mortgage company.
Name,
address and phone number of NEAREST LIVING RELATIVE.
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