Everyone talks about how hard it is to get a home mortgage now. It is more difficult than it used to be, but it is not impossible!! We are back to the days of income verification, asset verification and good credit. If you can verify your income and the money you need for closing, plus you have decent credit, you can buy a home!
There are more questions these days than in the past few years. We need more information and your loan officer will ask more questions! Be prepared to document everything you have. The basics are 1-2 recent paystubs, 1-2 months of bank statements and 2 years of w-2's and tax returns. When we look at your bank statement, we are looking for large deposits that we need explanations for. If you have a deposit that is large (and that may just be a $100!), you may have to show where it came from. If you sold something, keep receipts and documentation of the sale. If you cashed in a retirement account, stocks or a mutual fund, keep copies of the transaction and the account statement. If the money is a gift, we have to have a paper trail on the deposit and a gift letter. The underwriter will want to see it.
When an underwriter looks at your credit report, they will look for new inquiries that could show new debt. If there is an inquiry on your report, you will need to write a letter of explanation telling why that inquiry is there. If there is new debt, you will need to show what the new payment is if the account is not on the credit report yet. If there are late payments or collections, you may have to write an explanation on those accounts. You may also have to pay off any collections.
The underwriter will verify your income. They look at your paystubs and w-2's. We also get a printout from the IRS to see that what we have matches what the IRS has. If you have self employment income (or a loss), we will use that against you in qualifying. If you are married and getting the mortgage in your name, but your spouse is self employed and has a loss on the tax returns, the underwriter will lower your income by that amount. If you are self employed, we will have to verify the business through some type of third party verification – that could be the internet, a license, phone books, etc.
The appraisal will be done on the property you are buying. It is very common to have to pull a computerized valuation on the property you are buying and sometimes we need a desk review in addition to the appraisal. That desk review may come in lower than your appraisal. If that happens and the sales price is higher than the desk review, there will be an issue with the mortgage. The lender may ask the appraiser for a rebuttal to attempt to increase the review appraisal value. This seems to happen more frequently on refinances or properties that are unique.
Work with your loan officer to make sure you have everything you need in the beginning. The loan officer will probably call you with additional requests for more information as the process goes along. Right before closing, they will also update the credit report and do a verbal employment verification. Make sure you don't go out and buy new furniture, a car or open new credit cards while in the mortgage process – it may make your loan approval turn into a loan denial and no one wants that.
Your loan officer wants to help you with the process and they will also need your help. Getting a mortgage is a little more difficult than it used to be, but it's not impossible! Keep good records and remember there is a reason that the loan officer is asking for your life history!!
Leslie Vanderwerf, NMLS ID#335509, Advisors Mortgage - Email – Website
