We are in a new time of loan processing. In years past lenders required less documentation, allowed for substitutions of required forms, and readily made exceptions. Today, we find that lenders are the exact opposite – lenders require fully documented files and rarely make exceptions.
[See the mortgage documentation checklist here]
Following are few tips to avoid documentation troubles.
1) Remember to provide all pages of a document. Often times, borrowers will provide only the first few pages of an account statement or income document. Always provide all pages. This is often overlooked on bank statements, when page 6 and 7 of 7 are intentionally left blank – we still need to see those pages.
2) Be sure to provide clear copies with legible content. Often times we receive faxes or scans where part of the document is blurred or cut off and this regularly leads to further conditions.
3) If you have shared asset accounts with non-borrowing spouse or other individuals not on the loan application, be prepared to get a written explanation from them.
4) We are required to source any non-payroll deposits on bank statements. This is frequently a frustration for borrowers. For example, if you receive a tax refund check for $2,000 and deposit it into your bank account, we will need to see proof of the deposit. Proof is usually a copy of the check with a letter explaining why you received this money.
5) Income documents must be thorough and it can feel like overkill. For example, if you receive social security income, we will need your most recent award letter, 1099 Benefit statement from the previous 2 years, and bank statements evidencing receipt of deposit. Why do they need 3 documents to prove the income? Again, feels like overkill, but that is the lending condition today!
Remember to be thorough. Provide as much documentation as you can up front to help avoid additional requests and delays later.