“This is BS, I’m going to use someone else?”

By
Real Estate Mortgage Broker with Amerifirst Financial, Inc. - FHA, Conventional, Jumbo Loans

"All I gave the lender who did my mortgage the last time was my social security number and I signed my Getting yelled atdocs the following week. Now you want my last 2 years tax returns, this is ridiculous! I'm not giving you one more piece of document. Can't your underwriter see I have an 800 fico score and $500K in the bank, oh and I'm putting half down. This is BS, I'm going to use someone else!" 

This is an all too common question and reaction when we send our clients their list of needed items required in today's market to get them approved for a home loan. The client I quoted above actually did go down the road to a different lender but came right back because their list was longer than mine.

Fog a mirrorTo put it as simply as possible, the same people (banks/investors) who lent us money 3 years ago just by our ability to provide a social security number and fog a mirror, now have in response to the mortgage meltdown of the last few years created a much more extensive list for approval.  Fear and concern play a big role in this as they want to now make sure that your ability to qualify is fully documented, which means more paperwork.  When you think about it, this is actually quite logical and should have been the only norm all along.

But before we begin to think this is more trouble than it is worth, let's look at it Person loaning moneyfrom a different perspective.  Consider this question and statement is posed to you:  "Excuse me, you don't know me at all, but can I borrow $250,000 to buy a home?  I promise I will pay you back over the next 30 years." What would you ask for in return as a guarantee or satisfaction that this person actually has the ability to pay you back? Would you accept just a credit report and a couple of pay stubs?  Or would you want to dig deeper?

I would think that when you stopped and really looked at it from this perspective, ultimately what you would want to show their ability would probably be very close to what we are already asking for.  And as a Licensed Loan Officer it took me awhile for this to sink in and begin to look at it from this perspective.  As someone who has been in the mortgage business over 6+ years now, believe me I miss those parts of the old days too.  It is significantly easier on our end as well to only have to ask for a few things.  But when you look at it from a perspective of what would I ask for if it was my money being lent out, the items needed become reasonable. 

So I would leave you with this:  if you're thinking about buying a home, I recommend meeting with your Licensed Loan Officer FIRST and review your situation so you can avoid any pitfalls or surprises.  Knowing the process and the expectations beforehand, combined with a little bit of prep work on your end, will make what is supposed to be an enjoyable time go much smoother.  

Here's a list of items that may be required from you.

APPLICATION REQUIREMENTS

•1.       Last 2 years W-2s

•2.       Last 2 years Tax Returns Federal only, all pages and all schedules

•3.       30 days of Most Current Pay Stubs

•4.       Last 2 Months Checking and Savings Statements, all pages even if blank

•5.       Paper trail all large deposits, if applicable

•6.       Most Recent Asset Statement, i.e. 401K, IRA, Mutual Funds, Retirement, all pages even if blank

•7.       Drivers License & Social Security Card

•8.       Name and Number of your Human Resources Representative

•9.       Name and Number of your Homeowner's Insurance Agent

•10.   Mortgage Statement for All Properties, if applicable

•11.   Signed/dated letter explaining all credit inquires, if applicable

•12.   Signed/dated letter explaining all derogatory credit, if applicable

•13.   Rent free letter from parents signed/dated by parents, if applicable

•14.   Homeowners Insurance Declaration page for All Properties, if applicable

•15.   Last 12 months cancelled checks for rent payment, if applicable

•16.   Name and Number of your Landlord, if applicable

•17.   Copy of Cancelled Check from Earnest Money (Front and Back)

•18.   Awards Letters, i.e. Disability, Social Security, Rental, Retirement, Pension, etc. , if applicable

•19.   Copy of Rental Leases, if applicable

•20.   Current YTD Profit & Loss statement, if applicable

•21.   Child Support Agreement, if applicable

•22.   Copy of Divorce Decree/Separation Agreement, if applicable

•23.   Copy of Bankruptcy Filing & Discharge, if applicable

•24.   If you are VA eligible:

  1.  
    1. DD-214 or Statement of Service
    2. Drivers License
    3. Certification of Eligibility
    4. Name and Address of Nearest Relative

Please remember Lending guidelines have changed in recent months and additional documentation may be required, depending upon your specific situation. We want to help make the mortgage process as simple as possible and following this mortgage checklist will get the ball rolling in the right direction.

Posted by

 

Respectfully,

Ron W. Kelleher

Licensed Mortgage Planner

Email

Financing Available

                                                                

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Re-Bloggged 7 times:

Re-Blogged By Re-Blogged At
  1. Kevin Kelly 01/04/2011 05:36 PM
  2. Timothy George 01/04/2011 06:23 PM
  3. Herb Baldwin 01/04/2011 08:04 PM
  4. Mark Taylor 01/04/2011 08:59 PM
  5. Donald Bradbury 01/04/2011 11:53 PM
  6. Fernando Herboso - Broker for Maxus Realty Group 01/05/2011 05:56 AM
  7. Steven Brand 01/13/2011 11:10 PM
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Topic:
Home Buying
Location:
Arizona
Tags:
why so much documentation

Comments 32 New Comment

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Rainmaker
598,594
Donne Knudsen
CalState Realty Services
Los Angeles & Ventura Counties in CA

Ron - I'm going to politely disagree with #23.  When pre-approving my borrowers for a loan, I always have that conversation with them, "just because you can get approved for XXX amount doesn't mean you should spend that much".  I always try and advise my clients, especially the first timers, that they need to make a realistic budget for themselves and to stick to it.  Now, while many of my borrowers may take my advice, there are others that won't and they will buy the max they can get.

I just had this conversation recently with one of my borrowers who wanted to do this.  Once again, I had the conversation about the payment shock and his dti ratio (within program guidelines but high).  He didn't care and he's looking at the max price range.  While we do have a duty to educate and advise our borrowers to be cautious and prudent with their mortgage and home buying needs, what they choose to do is their choice.  JMHO

January 05, 2011 12:08 PM
Rainer
29,035
Ron Kelleher
FHA, VA, Conventional, and Jumbo Home Loans in Arizona
Amerifirst Financial, Inc. - FHA, Conventional, Jumbo Loans

Thank you everyone for your GREAT feedback and comments!

Carla - I don't know of a stated income program available and not sure when or if they will come back.

Sonja - if the borrower is using retirement funds for down payment then they borrower must provide the agreement from borrowing from their retirement fund and paper trail the withdrawal. If borrower is only using the retirement for reserves, thety should only need to provide most recent statement.

Thanks again!  

January 05, 2011 12:51 PM
Rainmaker
565,047
Robert Rauf
HomeBridge Financial Services (NJ)

Ron, Well aware of the Home path plan, but this was a refi scenario... After 20++ years in the lending business not much has changed.... everyone's hair dresser, mother, neighbor etc... knows more that we ever will!

January 05, 2011 02:27 PM
Anonymous #31
Anonymous
Karil Lauren

Ron, I almost had a couple transactions bust because of buyer frustrations with lenders. It really does require patience (on everyone's part) to educate and understand that today's market is not the same as 'the good old days' ... which in retrospect, weren't really so good after all.

January 08, 2011 10:30 AM
Anonymous #32
Anonymous
David Delahunt REALTY EXECUTIVES INTEGRITY - Milwaukee, WI

Great post Ron!! Arguably a bit of this is "over the top" but it is the inevitable result of many unbridled, undisciplined, "devil may care", irresponsible, "loosey-goosey" and (ultimately) costly lending practices of the past. Now comes the time to pay the piper!! Thanks in advance for taking good care of Rose and Dick D!!

March 07, 2011 05:09 PM
Anonymous
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Rainer
29,035

Ron Kelleher

FHA, VA, Conventional, and Jumbo Home Loans in Arizona
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