When applying for and having a mortgage loan processed, one of the most important pieces of advice I can offer, is very simple: "Do what you're told". Exactly what you're told. Do not deviate, and do not do what "you thought" would work. Unless of course, you want the process to be prolonged, you have an affinity for migraines, or you're a masochist and making things painful for yourself is just kind of your thing.
The mortgage industry doesn't make sense (to anyone not in the mortgage industry, and even to many who are). But with 15 years of experience helping countless borrowers with loans, I can assure you, the system capital IS, capital NOT, capital WORTH, capital FIGHTING. The process IS NOT WORTH FIGHTING.
We recently had a loan file where a borrower who needed to bring money to closing had outlined the plan for paying that money, then was incensed to discover we needed more documentation because he deviated from that plan. He deviated from the plan because "it made sense to him" that what he sent (in lieu of what he said he'd be sending) should be good enough.
Well, if the $2 million bucks we were lending was coming from my wallet and being repaid to me with interest, it probably would make sense. But it doesn't make sense to the final investor. It doesn't make sense to the MBS market. It doesn't make sense to the US Government which, thanks to the Patriot Act, ensures we get to play the role of special agent when it comes to looking at our customer's money. At the end of the day, those groups make the rules, we just have to play by them.
The good news is, we're really good at playing by the rules. We know them, we know how to streamline even the most difficult of situations, and the pain points we feel on the back end of just about every loan process are rarely felt by our customers and referral partners. BUT, when we make a plan, we've got to stick to it. Everyone does.
I'm sure there may be a masochistic lender or 2 out there that asks for things they don't need and just enjoys every loan being difficult. We're not them. We ask for nothing that's not needed, and our loan process is designed to get a borrower from start to finish with as little effort and time as possible. But, everyone needs to play by the rules, and there's sadly not much room for 'common sense'. We ask for what we ask for specifically because it's specifically what we need - the key word being specifically.
We make the mortgage process as easy as possible, but it's important to note that not everything makes sense. When it doesn't, 99% of the time thta feeling comes from a "but I'm a good borrower and it's OBVIOUS I can afford this loan!". But these days, it needs to be obvious you can afford the loan. AND obvious that an investor cannot find anything with a fine toothed comb that would come back to bite the originator in the wallet should the market slow down and investors start looking for ways to cash in. AND obvious to the government that there is zero chance any funds were moved between borrower accounts that are undocumented or not accounted for (because, the war on terror or something). So while it might not seem to make sense, mortgage applicants must trust that sometimes, it doesn't have to make sense to them.
Want to make life easier on yourself when getting a mortgage? Here's a quick list of some of the top items that "common sense" doesn't dictate:
- Bank or other asset statements. When requested, a lender needs 2 full months, all pages, non-redacted (no, you cannot black out your account numbers and the purchase transactions you'd prefer to keep private). If a transaction takes place after the most recent statement you provide, there can't be any gaps (example: your statement ended February 15th, and you wrote a check we need to show cleared February 22nd. You can't just show a transaction history for February 22nd, the transaction history must cover from the 15th through the 22nd to ensure there are no gaps)
- Cell phone documents/screenshots. We can actually use these, BUT, if you're showing a bill paid, bank/asset information, it's important to note what we use MUST include identifying info - a page url, your name indicating the screenshot is from YOUR account, and an account # showing the account is one we have documented. Screenshots without this info, bank generated excel spreadsheets, etc, are not acceptable.
- Bank and asset statements for ALL accounts used for the transaction. Moved money from one account we don't have documented into another account we do have documented? We'll need the same 2 month history for the originating bank source/401k/etc
- Keep your receipts. No, not that mile long CVS receipt. All large financial transactions should be documented. Made a payment to the county for your taxes due soon? Keep the confirmation page handy so we have proof before the state/county updates their online records. Have a large deposit (generally considered 50% or more of your monthly income) hitting an asset account that we're documenting? Make sure to maintain a papertrail for that deposit.
You can be proactive in maintaining good financial records and keeping your finances organized, but above all else, work with an experienced LO with a great team backing them up, and when they tell you what needs to be done to get your loan closed - do what you're told.