Mortgage Verification and Qualifying

We have all heard that it is hard to get a mortgage and qualifying isn't the same as it used to be.  Lenders have learned from the current economic crisis to verify and validate every piece of information in the mortgage file.  Some days it seems that we are verifying everything several different ways and it's probably true!  Here are some things to watch for and be aware of:

Employment:  Even after underwriting is clear to close and your loan is approved, the lender is going to do a verbal verification of employment within 24-48 hours of closing.  If you are no longer working, your loan will not close.  So don't quit your job!  If something does happen with your employer right before closing, let your loan officer know so they can work with you on any possible options that you might have.  Your income will be verified with 30 days of paystubs and 2 yrs of w-2's – some files require 2 yrs of federal tax returns.  Your lender will also verify with your employer either verbally or with a written verification to back up the paystubs.  Your lender will also get a copy of your tax transcripts with the IRS form 4506.  If your income doesn't match your paystubs and w-2's, you will need to explain and it may deny your loan.  If you or your spouse has a business loss, let your loan officer know.  It may affect how much you can qualify for.  If the spouse with the business loss isn't on the loan, it can still affect what you can qualify for.

Assets:  You will need to provide a minimum of a 30 day bank statement – all pages!  Frequently borrowers will send pages 1, 2 and 3 of a 4 page statement.  The last page may just be bank advertising so they don't think we need it, but the underwriter doesn't know what's on page 4.  If your statement says 4 pages, we need all 4 pages.  If you are printing the statement from the internet, you need to make sure your name and account number are on the statement.  We have to verify the money you need for closing and any reserves that are needed.  Make sure there is enough money in your account for us to verify.  If you are getting a gift, we need the gift letter and documentation that the donor has enough money to give you.  We will usually have to verify that the earnest money check cleared your bank account.  Make sure that you update the statements that your lender has once that check has cleared your account.

Appraisals:  Once your appraisal is received, most files require lenders to validate the appraisal with an automated valuation service.  Sometimes that leads to a desk review or a field review of your appraisal.  You may feel like once the appraisal is done, everything is ok, but with the review process, it can change the value of the appraisal.  We have had field reviews come in and lower the appraisal value.  That can mean you have to restructure your loan.  The appraisal is also one of the longest parts of the underwriting process.  The underwriters are going through the entire appraisal and it's very common to have underwriting conditions on the approval regarding the appraisal.

These are just a few areas that we have noticed problems with when we are trying to get your mortgage approved.  If you have concerns in the beginning about your employment, your bank account or anything else, talk to your lender.  Every lender is analyzing every file more than ever before.   Little things that may not seem that important to you may be very important to the underwriter.  The more we can explain in the beginning, the fewer problems we have in underwriting!

Leslie Vanderwerf, Advisors Mortgage - Email – Website