In my opinion, the number one way to make a loan transaction fly through the process is by submitting an Awesome Loan Package! An Awesome Loan Package is actually very easy to put together. All it takes is a little attention to detail.
Let's start with the loan application. The key idea I want you to remember is to be accurate and complete. Some items are extremely important to be accurate with. Others are very important to be complete.
You want to be extremely accurate with:
- The number of units
- Occupancy (is it your primary residence, vacation home, or investment property)
- Length of time at address (if any less than 2 years supply the former address(es) for a complete 2 year history
- Time on job (any less than 2 years supply former employer(s) with accurate dates of employment. If you have any gaps in employment, prepare a letter explaining the reasons for the gap
- Checking the Self Employed box if you owned 25% or more of a company
It is extremely important to be accurate with this information on the application because YOUR LENDER WILL FIND OUT IF IT IS NOT ACCURATE! They have extremely good quality control systems these days. If you are not accurate with this information, you will have some explaining to do! Explanations take time, and time is your enemy, especially on purchase transactions.
You want to be extremely complete with:
- Sources of your down payment and/or settlement charges
- All addresses where you have resided in the last two years
- All employment in the last two years
- All sources of income
- Listing all of your accounts that hold liquid assets (don't forget about the cash value of life insurance)
- List all real estate owned, even if there is no mortgage on a property
Being complete with these parts of the loan application is important not only because it speeds the process, but also because it can make the difference in qualifying for the loan. For example, your lender wants to know that your cash reserves are enough to make the payments if times get tough for you income-wise. Listing all of your liquid assets is a simple step to take that answers this question.
Once again, accuracy and completeness are the two key ideas to remember when completing your application. Part 2 of the Awesome Loan Package will focus on income documentation - stay tuned!
Do you need help structuring a loan, or getting a rate quote? Call me at (650) 222-0386, or e-mail me
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Don't forget to go over all activities in the last 45 days that could affect their credit!
Hi Phil, Nicely done and well constructed. With the new lending rules on re-verification, it is also very important to be sure the Buyers know not to buy things on credit or open new accounts during the loan process time that might change their credit score..
Drew - that will be written about in a following post, good idea!
William - you pointed out an issue that could be a big problem. How can anyone ever remove a loan contingency prior to funding with this new procedure?
Excellently described and thought out. Thank you for sharing this post.
great checklist, thank you! I'm bookmarking.
Hi Phil -- This post illustrates why it's critical for a buyer to partner with an experienced and competent loan professional so the guidance is there. Meausre twice and cut once as the old saying goes.
A comprehensive and complete loan package will help a mortgage broker obtain a faster approval from a lender in many cases.
Paul.. a good checklist. I have found that it seems like 50% of all loan officers can't even fill this part out correctly, regarding the mortgage application. Most of all, what was not mentioned where the specific details that can easily kill a deal. Such as paying alimony or child support, or some other loan that is not on their credit report. So either asking the right questions and or able to read a pay stub correctly. They you have bank statement issues, such as large deposits.. If anything, these are the areas that I see loan officers fail the most and why loans would be denied. Just more food for thought... thanks
Good points! I agree with Drew above about making sure people aren't opening OR closing accounts leading up application OR prior to closing. The lenders ARE pulling a second credit report prior to closing and looking for new accounts or major changes.