Why do you keep asking me for all that paperwork Mr. Loan Officer?

By
Real Estate Broker Owner with BROKER of Green Realty Properties® - 954-667-7253 BK3175566
http://actvra.in/GbD

Back in the good old days of the real estate boom, all you had to do was have a pulse and you'd get approved for a loan. Fast forward to the mortgage crisis, and many layers of fact-checking have been added to the mortgage process (as they should have been from the beginning) by regulators, Fannie Mae, Freddie Mac, and FHA (the national authorities who finance the majority of mortgage loans).

Lenders go through a 5 step process from the time they meet the borrower to the time the transaction is closed, and they need a whole lot of paperwork along the way. So borrowers, start getting your ducks in a row and be ready for your loan officer at every stage!

 

Stage 1: Pre-approval

 

At this stage, you'll need to provide all income and asset documentation to determine whether you qualify for a mortgage. Documentation required include:

 

*Credit report

*W-2's

*Pay stubs

* Most recent federal tax return

*The last 2 months of bank and investment statements (all pages, all accounts)

Your credit will be reviewed and the loan data will be put through underwriting. The loan officer will then issue you a pre-approval letter to take you your Realtor. Because it may be a while from the time that the pre-approval is issued until the Buyer puts in an offer on a home, any changes that come up should be communicated to and checked out by the loan officer.

 

****From a Realtor's perspective, my firm will not take any Buyers out to see a property until we see a proper pre-approval letter that has taking all of these documents into consideration in issuing the letter. The advantage to you, the Buyer, is that you know what you can actually afford instead of guesstimating, and when you see a property you like, your offer won't be held up by waiting for a pre-approval.***

 

Stage 2: Full application

 

The loan is official at this point, and the loan officer will update any documentation already submitted (anything older than 90 days). The Buyer will be questioned on:

*Any credit issues on the credit repor

*Deposits that appear on your bank statements that are over $500 will require source documentation (excluding your pay checks)

At this time, a full mortgage application packaged will be completed by the loan officer and borrower at a sit down meeting.

 

Stage 3: Submitted to processing

 

The mortgage processor will now review the package that was submitted by the loan officer. The processor will order:

 

*Title examination and legal work

*An appraisal

*If you're buying a condo, something called a condo questionaire to be sent to the appropriate party

If anything was missed by the loan officer, the processor will request documentation (four eyes are better than two). If anything is missing, it will hold up the process, so it's important that all requested documents back ASAP.

 

Stage 4: Submission to underwriting

 

Once the appraisal comes back, the processor orders a "Fraud Guard" report. This report reviews everything and everyone involved in the transaction to ensure that no party in the sale has been involved in fraudulent activity in the past. The borrower and their background, the appraiser, the attorney, and the property and real estate professional involved will all be looked in to.

 

The appraisal, the condo information, and all documentation thus far will also be reviewed. Any of these reports may trigger a request for additional documentation.

 

Stage 5: Underwriting:

 

The underwriter is responsible for reviewing the loan package and issuing the approval. This will be the third set of eyes (six is better than four!) reviewing all the details for compliance to all regulations and guidelines. The goal is to clear all conditions, but if there are any concerns that arise, the underwriter can approve the loan subject to additional documentation.

 

After loan approval

 

Even after you close, there are several more steps in the process where additional paperwork may be asked of the borrower.

 

1) In the week between the approval and the closing, the lender has to do a verbal verification of the Buyer's employment status. Any changes will require additional documentation.

 

2) The credit will also be "refreshed" to make sure that there's no new debt or credit that may impact the mortgage qualification. This may require additional documentation.

 

3) If any of the documents are older than 90 days, the loan officer will need update documents.

 

4) After the closing, the loan is re-reviewed by the end investor, and there may be a request for additional documentation.

 

Clearly this is a long and time consuming process, but as my Transaction Coordinator says, you're not buying a head of lettuce, you're buying a house. Although it can be a very frustrating and annoying process, please remember that your lender is just doing their job and it's vital that you work with them. It's important for borrowers to understand the process and the reasons behind it, so ask questions and keep communications open with your loan officer to minimize potential frustration. Hopefully with all the information at hand, you'll have a smooth and efficient lending experience!

 

 

For More Tips, Please Read

SURVIVOR GUIDE FOR REAL ESTATE BUYERS IN 2012 ~ PART 1

SURVIVOR GUIDE FOR REAL ESTATE BUYERS ~ PART 2 - Buying a home Using Financing

 

Posted by

If you or anyone you know need help Selling or Buying a Home in Broward & Miami-Dade Counties, please don't hesitate to call me at 954.667.7253

 

Help lots of people and have a great day!

Patty Da Silva, CDPE©, RESS®, AHWD®, e-PRO®, GREEN, CFS, TRC, RSPS

BROKER - REALTOR® Serving South Florida ::: 954. 667. SALE (7253) ::: Green Realty Properties®

Visit www.WeLoveSouthFlorida.com for SouthEast Florida's best properties.

 

 

Copyright © 2008 - 2013 By Patty Da Silva, CDPE©. All Rights Reserved.

Legal Stuff: This article (Contents) reflects the opinion of the author and it is not to be considered legal advice. The author is not an attorney or a CPA. If you are in need of legal or tax advice, it is recommended that you to contact a trusted professional advisor.

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Re-Bloggged 3 times:

Re-Blogged By Re-Blogged At
  1. Chuck Carstensen 08/11/2012 06:00 AM
  2. Gene Mundt 08/11/2012 11:04 AM
  3. Gabe Sanders 08/20/2012 04:06 AM
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Ambassador
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Patricia Kennedy
For Your Home in the Capital
Evers & Company Real Estate, Inc.

Hey, Patty!  I included this post in Last Week's Favorites.  Please check it out, and have a great week!

August 19, 2012 10:46 AM
Rainmaker
509,096
Wayne Johnson
San Antonio REALTOR, San Antonio Homes For Sale
Coldwell Banker D'Ann Harper REALTORS®

Patty-Thanks for giving some of the background activities for loan processing. Some lenders have additional steps but this was a great explanation.

August 19, 2012 07:12 PM
Rainmaker
412,608
Patty Da Silva, Davie, Southwest Ranches Cooper City, Plantation, Weston, REALTOR
Top Listing Broker
BROKER of Green Realty Properties® - 954-667-7253

Patricia, you're so sweet, thank you!

Wayne, oh by no means is this all inclusive, but it's a start!

August 21, 2012 08:11 AM
Rainmaker
312,685
Sandy Acevedo
RE/MAX Masters, Inland Empire Homes for Sale
951-290-8588

Hi Patty this is a great way to lay it all out and I love the head of lettuce comment...too funny!

August 21, 2012 11:29 AM
Rainmaker
412,608
Patty Da Silva, Davie, Southwest Ranches Cooper City, Plantation, Weston, REALTOR
Top Listing Broker
BROKER of Green Realty Properties® - 954-667-7253

Sandy, thanks! I'll let her know. I think it's funny too.

August 21, 2012 11:40 AM
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Rainmaker
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Patty Da Silva, Davie, Southwest Ranches Cooper City, Plantation, Weston, REALTOR

Top Listing Broker
Call me to list your home today - 954-667-7253
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