Believe me when I say this, your lender hates asking you repeatedly for documentation. However, in these times, investors have really tightened up. The days of just having a pulse and getting a loan are over. Most lenders are also verifying your tax returns directly with the IRS prior to closing the loan. So as a loan officer I feel it is important for me to get as much information up front as possible. This allows me to possibly prevent any surprises at time of underwriting which typically takes 2-3 weeks into the transaction. A loan officer should ask you for the following items at the time of application.
- Current paystubs covering the last 30 days.
- W-2's and tax returns for the past 2 years.
- Self-employed people require different documentation (business returns, Profit and Loss, etc)
- Bank statements for the previous 60 days.
- Explanation and documentation for any deposits that are not direct payroll deposit.
- Cash deposits are not acceptable. Be sure to keep copies of all deposits and where they came from.
- Credit explanations for lates up to 10 years old that are on your credit report.
- Bankruptcy papers (if applicable)
- Divorce Papers (all pages no matter how long), Legal Separation Agreement, and/or Child Custody agreement.
- Proof of receipt of any alimony or child support for past 12 months.
- If you are receiving a gift, the donar will need to sign a gift letter and provide proof they have the funds in their account and it has been there for at least 30 days. DO NOT transfer their money into your account as it is a bigger headache to papertrail.
- Any part time jobs and/or overtime income in order to be used must have been received for past 24 months AND expected to continue.
- Money for the appraisal. (Please note this cannot be collected until you review the good faith estimate.
- Additional documentation as needed.
- Estimated insurance quote.
- The lenders now run MERS on everyone. This means they will find any properties that you currently own or have owned. Be sure to disclose them all even if you do not owe anything.
Just keep in mind everything needs to make sense, match, and explained and documented if necessary. Also, 3 people look at the file and will most likely ask for something the other person missed. First there is the loan officer, second is the processor, and third is the underwriter.
You may also receive several good faith estimates and truth in lending statements through the transaction. Any time there is a change the good faith is resent. If the APR is off by more then .125%, then you need to resign the truth in lending as well.
So be prepared and be patient. It's not just the person you're talking to you picking on you, it's the way it is now. The more you have upfront the smoother your deal will go.
Remember, we are just as frustrated as you are! But there are so many new rules and regulations, checks and balances, and accountability. That is why it is so important to be pre-approved for your loan before you buy and even before you list your home for sale. There is nothing worse then selling your home to find out you no longer qualify for a loan. I am here to help you through the red tape!
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