You may have heard of the paperless mortgage and you may have been told that it's possible to complete a mortgage application online. I would guess such things are possible, but my experiences during the past few weeks suggest that both paper and complexity are likely to be part of the mortgage process long into the future.

My adventures began simply enough when I decided to refinance. The goal was to combine four loans on three properties into a single mortgage, write fewer checks each month and cut financing costs.

"No problem," said my loan officer, "you can apply online."

And so I dutifully opened the right web page, started my application, and then watched with great interest as the best efforts of mankind to automate mortgage processing stalled, quaked, and shivered.

It seems, said my lender, that I had somehow befouled the system. After several tries and much irritation we determined it was best to apply off-line.

Completing the now paper-based application and obtaining a credit score were both easy and uneventful -- until my loan officer said, "by the way, we need to verify just a few items on this list." The "list" contained more clauses and requirements than an international trade agreement.

So we gathered great clots of information, supplied folios of paper, and one day received word that we were approved.

You would think that having passed the rigors of the loan application process it would now be possible to march directly to the settlement table and close the transaction.

That would be wrong.

Someone at the settlement office called and said, "by the way, we need some information...."

What they wanted was proof that the property was insured, that the insurance had been paid, and they also wanted a copy of the title insurance policy from our last closing.

Good luck looking for canceled checks to prove you paid your homeowner's insurance. If -- like us -- you prefer the lender to make such payments, you have no checks. But the good news is that now lenders provide an annual escrow account statement which shows what has been paid and when. And there, happily, it was noted with black ink on white paper that our homeowner policy had been paid in full. (Our insurance agent also needed to switch coverage from the old lender to the new one, something taken care of within minutes of our request.)

What can be concluded from this experience?

When someone suggests that a paperless mortgage is possible, just request $500 for each sheet you must provide, read, complete, or sign. At the end of the loan process, you won't need a mortgage.

And do something else: Have your paperwork in hand. At a minimum you'll likely need:

• Pay stubs for the past month or so.

• Tax returns for the last two years.

• The latest statements for each mortgage, credit card account, auto loan, or other debt.

• Statements from each IRA, Keogh, checking, and savings account.

• A copy of your title insurance policy from when you last bought or refinanced the house. Check your records: If you do not have this document contact your last closing agent to obtain a copy NOW for your files -- it may allow you to obtain a "re-issue" rate when you refinance.

• The annual escrow account statement you receive from your lender. This is where you can find evidence that property taxes and homeowners insurance have been paid. Also -- and this is a biggie -- money in the escrow account from the loan you are refinancing must be returned to you, usually within 30 days after closing.

For more articles by Peter G. Miller, please press here.

Published: July 24, 2001

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Peter G. Miller, also known as OurBroker®, is the author of six real estate books -- including The Common-Sense Mortgage -- and is the original creator and host of America Online's Real Estate Center. Peter's weekly columns appear in more than 100 newspapers nationwide, he is also published in a variety of other media outlets and he is a frequent speaker at national events and conventions. Peter welcomes your questions, comments, and news releases via e-mail at .