A Five-Step Formula for the Perfect Loan File

Most people don’t try because they think getting a loan is too difficult.  While getting a mortgage loan isn’t the easiest thing in the world, it really is not difficult.  It takes documentation!  Even if it seems like we are asking for way too much information, understand early in the process that we are asking you for the documents and explanations of what is required for a mortgage loan today.   Meeting these documentation requirements is probably the biggest frustration for home buyers today.  This process will be so much easier if you just get the requested documentation to your mortgage lender when asked.  The real goal for mortgage lenders today is not the perfect loan, but the perfect loan file.

Here is a Five-Step Formula for that Perfect Loan File:

1. Meet Credit Underwriting Guidelines
   It is no longer necessary to have a high credit score, a large down payment, and stable employment to guarantee loan approval. Now, it is more important to have a borrower profile that meets credit underwriting guidelines. Your whole financial life needs to be supported, checked and re-checked, and reviewed once more before closing.  By doing this, the lender decreases its chances that the loan will be subject to repurchase.
   
2. Prepare for Processors and Underwriters
   You need to prepare for processing (the person who gathers the documents) and underwriting (the person who actually approves your loan).  This begins with your mortgage lender, who can match your financial qualifications to an appropriate mortgage deal and its underwriting guidelines. Your mortgage lender determines whether the information you provide can be validated and documented.  Be aware, however, that an underwriter can request additional documentation if the circumstances don’t quite fit the underwriting guidelines. If your mortgage lender puts your loan file together accurately and securely, your loan will close uneventfully.
   
3. Get Pre-Approved
   To start, you must begin with mortgage pre-approval.  This is accomplished through a phone interview by a mortgage representative. Be prepared to disclose everything: what you do for a living, your salary, how long you have been employed, and other such queries. Every dollar you own has to be accounted for, documented, and explained, including gifts from relatives and non-profit grants.
   
4. Report Your Homeownership History
   If you were previously a homeowner, or if you own a home now and plan to keep it as a rental investment, there are specific underwriting guidelines for you. Full disclosure of your credit and homeownership history can help stamp out future mortgage approval problems. Buyers with a short sale history or a recent foreclosure or a bankruptcy may have to wait a few years before they are eligible to take out another mortgage. Full authenticity of your mortgage history will prevent those dreaded calls by your mortgage lender who notifies you that there is a problem.
   
5. Have Proof
   Really, it all comes down to proof. Documents need to be specific and authentic. If your lender asks for a specific document, give it to them. Do not send summaries, and do not complain when your lender asks for something more specific. Give them the specific documents they request “because they said so.”

Questions?  Call or email us anytime!