Government loans require a lot of documentation so don't allow yourself or your customer to become frustrated. It is imperative for everyone to cooperate fully in order to have a smooth government transaction. Here is just a list of some of the "hold up" items as well as some recommendations on making it a smoother transaction.
- Tax returns must be SIGNED and DATED even if they were filed by an accountant or online (Full return w/all schedules must be included)
- Bank statements must include NAME of the bank and the customer, Account number, and cover a 30 day history. If they are online statements they must be printed directly from a secure website indicated by "https" at the bottom of the printout. If they are provided by a bank employee, ALL pages must be signed, dated, and stamped.
- A pest inspection must ALWAYS be done for VA loans and submitted to the lender for approval. If the inspector comments on items like rotted wood, be prepared to fix them in order to close the transaction.
- Contract must be signed and dated by all parties, as well as all changes initialed/dated by all parties. This can no longer be taken care of at closing.
- Do not put items in the contract such as "Seller to pay buyer $500 for repairs." Anything the seller is paying to the buyer must be "Towards closing costs" or paid directly to a third party vendor. (IE. Handy man, Home Warranty, etc.)
- Delays that are out of our control happen with government loans as all of you know. Make it a less stressful process for you and your customer. Advise your buyer not to set up appointments w/movers, contractors, parties, etc. for the day after closing. The mortgage company understands and cares that our customers have obligations but sometimes delays are unavoidable. Advise customers to schedule appointments a week after the closing date.
- Turn in the contract asap. If there are changes required that must be initialed, sellers can get very irritated when they have to tend to the contract again a couple of days before closing.
- The worse the credit, the more documentation required. Prepare yourself and your customer.
- All VA applicants must have their Certificate of Eligibility (COE). If they have never used their VA benefits before we can generally obtain this online instantly. If they have used their benefits before this process can take SEVERAL WEEKS! Make sure this is taken care of before the customer finds a home so they can close on time.
- All FHA/VA applicants must have 2 years of work history. School/College does count. If the customer does not meet this requirement, they will have to provide a satisfactory letter of explanation telling us why.
- An offer letter is not sufficient to show income for FHA/VA loans. The customer must provide a pay stub including 30 days history prior to closing, NO EXCEPTIONS!
- If the customer receives a gift for down payment and closing costs, they must show this transaction properly by way of a gift letter. There should be a paper trail proving transfer of funds from the donor to the recipient (IE. Gift letter filled out by both parties as well as a copy of the cancelled check. Sometimes donor will be asked for a bank statement to prove ability to gift funds.) This is very important.
The above is a list sent to me via email from a friend(Bob Worthington of Coldwell Banker Mortgage) in the mortgage business. I hope you all take advantage of this list and go into your Real Estate transaction more prepared and hopefully you will not be asking "What's the hold up". Feel free to give us a call or email us if you have any questions. Thanks for stopping by our blog!