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Why Are Loan Officers So Nosy?

By
Mortgage and Lending with First Heritage Mortgage NMLS #: 938761

Has your loan officer requested to see all of your bank and financial statements, even retirement funds beyond what you will be using for your down payment and closing costs?  This might seem like more information than you need to provide, but there’s a reason behind it–your loan officer isn’t just nosy.

nosy

There are occasions when loan officers must show a borrower has “reserves,” or remaining funds available after the down payment and closing costs are paid.  The amount of reserves required varies by loan product, investor, and the borrower’s circumstances.  Below are a few situations in which your loan officer might ask you to show reserves.  (To help you understand the overview below, one month of reserves is equal to a property’s monthly PITI, or principal, interest, taxes, and insurance.)

FHA

  • You may be asked to show at least three months of reserves as a compensating factor for high debt to income ratios (See “Qualifying Ratio“).
  • You may be asked to show at least three months of reserves if you are purchasing a 3-4 unit property.

Conforming

  • You may be asked to show reserves if you are converting your primary residence to a second home or investment property when purchasing a new primary residence with financing.  In general, two months of PITI is required for each property you own with at least 30% equity and six months of PITI is required for property’s with less than 30% equity.

Non-Conforming

  • Some investors require 6-12 months of reserves.

If you are considering purchasing or refinancing in Virginia feel free to contact me for a mortgage consultation. To stay informed, follow me on Twitter and like me on Facebook.

If you are interested in purchasing or refinancing in one of the following states, I will be happy to connect you with a licensed loan officer in your state: Maryland, Delaware, Connecticut, Florida, Georgia, Maine, Massachusetts, New Hampshire, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Carolina, Washington D.C., or West Virginia.

Silvia Dukes PA, Broker Associate, CRS, CIPS, SRES
Tropic Shores Realty - Ich spreche Deutsch! - Spring Hill, FL
Florida Waterfront and Country Club Living

Hi Whitney, I agree, you explained the reasons for all that documentation and the the need for reserves well.  Thanks!

May 21, 2014 11:10 AM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Great write up and way to put it.  Lenders have to be nosey, because if they are not, then the underwriter will be and that review might delay the purchase.  And if not nosey, the loan might not even happen!  

May 21, 2014 11:55 AM
Whitney Watson
First Heritage Mortgage - Henrico, VA

Michelle-Thank you for your comment!

Dorie-Thank you for suggesting! I appreciate that!

Silvia-Thank you for stopping by!

Carla-Exactly! It's my job to be as thorough as possible so we can avoid any hiccups further into the process.

May 21, 2014 11:46 PM
Robert Vegas Bob Swetz
Las Vegas, NV

Hello Whitney ... Great Post and now I understand, "Kidding" and your post has been featured to the group:

SUCCESS AT ACTIVERAIN

VB 

May 22, 2014 04:10 AM
Gene Mundt, IL/WI Mortgage Originator - FHA/VA/Conv/Jumbo/Portfolio/Refi
NMLS #216987, IL Lic. 031.0006220, WI Licensed. APMC NMLS #175656 - New Lenox, IL
708.921.6331 - 40+ yrs experience

Whitney:  As a fellow Lender, got to tell you .. your post's headline had me chuckling.  You did a remarkable job at explaining something that is often misunderstood ... and frustrating for Borrowers ... Congrats on the Feature!

Gene

May 23, 2014 12:17 AM
Whitney Watson
First Heritage Mortgage - Henrico, VA

VB-Thank you for the feature!! 

Gene-Thanks, Gene! I know you understand. Sometimes our job feels like an invasion of privacy, though! I think it's helpful when you explain "the why" to the client.

 

May 23, 2014 12:33 AM
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

That's pretty funny. Sad thing is that sometimes I hear this from buyers..they don't want to give all "that" information to a stranger. Well....get used to it. 

May 23, 2014 01:09 AM
Kimo Jarrett
Cyber Properties - Huntington Beach, CA
Pro Lifestyle Solutions

Your headline got my attention. Great post for consumers who are new to the loan process and many more who are simply misinformed.

May 23, 2014 01:30 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

When I loan officer ask for something, just get it to them ASAP.  In fact keep a PDF of everything and save your pay stubbs.  They often ask for the same information over and over again.

May 23, 2014 01:34 AM
Travis "the SOLD man" Parker; Broker/Owner
Travis Realty - Enterprise, AL
email: Travis@theSOLDman.me / cell: 334-494-7846

Good info. I deal mainly with VA or USDA loans and no reserve issues there that I've been made aware of.

May 23, 2014 02:11 AM
Jill Winchel
Royal Shell Real Estate - The Koffman Group - Cape Coral, FL
We make it easy. You make it home.

Great info for buyers. They tend to want to keep everything secret but you have posted a good explanation of why they need to share.

May 23, 2014 02:12 AM
Dawn Welch
The Real Estate Consultants - Los Angeles, CA

Great post!  It's their job to be nosy indeed.  In the end it's best for all involve.

May 23, 2014 03:05 AM
Troy Erickson AZ Realtor (602) 295-6807
HomeSmart - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

It's fairly common that lenders will want to see some reserves on just about any loan. It's best if buyers just provide the lender what they want in a timely manner, otherwise they may not get the loan.

May 23, 2014 04:28 AM
Ed Silva, 203-206-0754
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

May they not have to be on the other end if they have to sell short. Then they are very nosy

May 23, 2014 05:45 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

This is some really good stuff. I might have to repost it.

May 23, 2014 07:39 AM
John DL Arendsen
CREST "BACKYARD' HOMES, ON THE LEVEL General & Manufactured Home Contractor, TAG Real Estate Sales & Investments - Leucadia, CA
Crest Backyard Homes "ADU" dealer & RE Developer

Hey Whitney, hope you didn't mind me reposting this on Trulia. I thought it was a very good post.

http://www.trulia.com/blog/onthelevelcontractors/2014/05/why_are_loan_officers_so_nosy

May 23, 2014 07:47 AM
Marte Cliff
Marte Cliff Copywriting - Priest River, ID
Your real estate writer

There's no such thing as privacy - especially if you want to use other people's money.

May 24, 2014 04:02 PM
Whitney Watson
First Heritage Mortgage - Henrico, VA

Thank you to all who have commented on my post! John-I don't mind at all--thank you for sharing!

May 27, 2014 05:13 AM
Shannon Milligan, Richmond VA Real Estate Agent/Associate Broker
RVA Home Team - Richmond, VA
RVA Home Team - Winning with Integrity.

I had a client recently call me asking this very question. Didn't understand why gifts had to be tracked. You do an amazing job for my clients and for that I am grateful! Great post!

Jun 04, 2014 09:17 AM
Whitney Watson
First Heritage Mortgage - Henrico, VA

Thank you, Shannon!

Jun 05, 2014 12:08 AM