A 5 minute read that will save you 5 days in the loan process!
You are in contract. You have all types of deadlines: property inspection, loan contingency, close of escrow, etc. Let’s face it – this process is stressful!
How can your stress be reduced? One way is by working with a mortgage lender who lets you know upfront about what you will need to provide beyond the obvious: paystubs, W-2s, and bank statements.
Here are ten action items you can perform prior to making an offer to mitigate the stress during the escrow period.
1. Are you a renter? – provide the most recent 12 months of cancelled checks (copies of the front and back of the check), and/or the name of the property management company.
2. Are you going to hold title in a trust – dig out a copy of your trust (along with any amendments).
3. Are you going to use retirement funds for either the down payment, closing costs, and/or cash reserves – provide a plan summary that documents the terms of withdrawal (this usually takes some searching, so be prepared!).
4. Are you going to use funds from a bank account of a business you own? Provide a letter from your tax preparer stating that the withdrawal of these funds will have no negative impact on the day –to-day operations of the business (this can be a deal killer because tax preparers do not like to write this letter – it puts them on the spot!).
5. Look at your bank statements – do you have non-payroll deposits that cumulatively add up to greater than 20% of your income? Provide copies of these checks along with a written explanation of each check deposited.
6. Do you own other real estate – provide copies of the tax and insurance bills for these other properties because the lender will include these payments in your debt-to-income ratios.
7. Is your income on pace to be less than your income from the previous year? Write a letter explaining why your income has declined.
8. Do you own your own business? Prepare a year-to-date profit and loss statement.
9. Are you getting a gift for the down payment and/or closing costs? Get a gift letter, a copy of the check, a copy of the deposit receipt into your account, and a current bank statement from the gift giver from the account the check was written from.
10. Most important! – Respond quickly to your lender’s requests! Time kills transactions! Instead of bellyaching about the documentation requested – focus on the big picture – you are going to own a new home!
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