Don’t Lose It

Written by Posted On Thursday, 16 March 2023 00:00

It’s no secret that your mortgage application will be accompanied by third party documentation. This third party documentation is provided in order to validate certain aspects of your loan file. The initial submission of provided documentation will come from you while other needed  info will come from others. The items coming directly from you include things like recent paycheck stubs, bank statements, perhaps income tax returns and the like. These are items that you have or at least can get with an email or two. Other documentation includes things like a title report or an appraisal. 

Your loan officer will send you a list of things you’ll need to provide before the loan goes into underwriting for an approval. In the old days, lenders would ask for pretty much anything the  underwriter might possibly ask for. You know, just in case. In today’s world of automated underwriting however, much of the needed documentation is asked for only after the initial loan file has been submitted to said automated underwriting system, or AUS.

When you receive your ‘needs list’ from the lender, it’s time to start gathering the requested documentation. If the lender wants to make sure you have enough funds of your own in order to close on the transaction, you’ll be asked to provide recent copies of your bank statements. If you’re self-employed you can expect to provide the last two years of personal and business tax returns. It might take you a couple of days or so before you have the requested items in hand. Or on your laptop. Lenders really don’t like for you to submit these items piecemeal, but all at once. But when you do in fact deliver this documentation, all you do next is to wait. Depending upon the current workload of the lender, that might take just a few days before you get an answer.

So a few days have passed and sure enough you get a call or email from your loan officer. The lender needs some more stuff and has a few questions. What do you do? Is it time to freak out? Is your loan about to be turned down? But it’s not the time to panic.

When you receive a request for documentation, the request is nothing more than making sure the loan file meets the underwriting guidelines. For example, so-called ‘credit documents’ such as a credit report need to be less than 30 days old. New bank statements might be needed in order to update the file. The point is that when the lender comes back with questions, all you need to do is answer and provide what’s being requested. It’s likely that your loan application is merely being updated. This isn’t the time to lose it. In fact, as long as what your loan application states is verified, you’re good to go.

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David Reed

David Reed (Austin, TX) is the author of Mortgages 101, Mortgage Confidential, Your Successful Career as a Mortgage Broker , The Real Estate Investor's Guide to Financing, Your Guide to VA Loans and Decoding the New Mortgage Market. As a Senior Loan Officer and Mortgage Executive he closed more than 2,000 mortgage loans over the course of more than 20 years in commercial and residential mortgage lending. 

He has appeared on CNN, CNBC, Fox Business, Fox and Friends and the Today In New York show. His advice has appeared in the New York Times, Parade Magazine, Washington Post and Kiplinger's as well as in newspapers and magazines throughout the country. 

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