This blog is a follow up to the one that I did yesterday. A question has come up and, since it comes up on a regular basis, I thought it wise to discuss it in my blog.
Many buyers, especially first time home buyers get really upset when they receive calls and/or emails from their mortgage co., asking for more documents during underwriting. This is normal and you should not be alarmed. It has nothing to do with your ability to get a loan. They just need more information, as they are following government guidelines, which can be tight. Yes, you've filled out an application and provided the typical docs attached to the application, Bank statements, copies of tax returns, w-2s or 1099's, etc. Good job! Now, here's where the work begins, depending on the type of loan that you get. Your mortgage Co. is going to request tax transcripts from the IRS. They're matching IRS records to your returns. If there is a discrepancy, they will want to know why. They will verify your employment upon contract and right before closing. ( They want to make sure that you still have the same job at the same pay). If you receive or pay alimony or child support, they will want to see court docs. If you make a large untypical deposit, they will want a paper trail, to know where it came from (The Patriot act). They will want to see that you have enough cash for closing, plus reserves. The amount of reserves required depends on the type of loan and loan to value. Even the slightest little thing that looks out of the ordinary, they will want an eplanation, I tell buyers every day "I don't care if they ask for your bloodtype or shoesize, don't ask "Why", just provide it." One thing is for sure: until the underwriter is comfortable, it will not close. Oh and one more thing: I've had many buyers complaining about their loan originators' delay of closing. My first question is "Did you get your docs in when requested?" When I get a complaint on an originator that is normally on top of things, something is usually wrong. If the buyer responds "Well, I was very busy and it took me a week to get docs back to them". Then that is the reason that we're late closing. Now there are other mortgage companies that have a history of late closings. It could be that they don't have enough processors or underwriters. It could be that they have to send the docs to TIM_BUK_TOO to be reviewed. In any case, just give them the answers they want and you'll be fine. Thanks for reading. Steve Houck