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The Mortgage Process or why do we want all this stuff?
A loan to purchase a home is different than a credit
card or auto loan. In the old days banks made loans from the money deposited
in their banks by their customers. With the invention of the stock market,
customers stopped putting as much money in the bank and lenders and banks
had to go to other sources to get money. They go to investors that want to
invest in mortgages. The two largest investors that purchase loans are
Fannie Mae and Freddie Mac. Most lenders go by the guidelines Fannie sets.
If Fannie will buy the loan, most other investors will too.
Because we are in essence loaning other people s money,
we have to follow all the guidelines of the investor buying our loans. If we
don t, the investor won t buy the loan.
That being said, my company s job is to give you a
quick, easy mortgage experience and get you to closing on your new home as
quickly as possible while at the same time making sure we get all the
correct documents to make the investor happy.
We look at your income, your credit and your assets.
Depending on how strong your loan is, you may have a reduced amount of
documents to send. If your loan is more complicated, we may need more
documents. In general though, we usually need a 30 day, current pay stub
showing your year-to-date earnings, 2 months current bank statements, all
pages with any large deposits other than pay being explained and documented,
and 2 years current W2s.
If you don t have exactly what we are asking for, call
us and tell us. We will work with you to determine if we can get something
else instead.
Where we find the biggest challenge and the biggest
frustration for our customers is providing us exactly what we ask for.
Although we sympathize with why you don t feel like you should have to give
us all pages of your bank statement because the balance is listed on page
one, if the statement says pages 1 of 4 , we need all pages.
If we ask for your current 401K statement and all you
can find is 2002, call your company and get a current statement. We have
heard great arguments and work with some very creative folks, but in the end
we still need the same documents, current within 30 days.
If we ask for a pay stub and you can t find your most
current one, please don t just send the one you found from May, 2001. We
can t use it and will be calling you to ask again for the current one.
Think of this process like you would if you were
lending your own money to someone. What kind of documentation would you want
to make sure they would pay you back?
The more complete your documents and the more you
communicate with us, the faster your loan can be processed and you can close
on your new house.
Coming next month: Credit Scoring what is it and how
does it work
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