A 5 minute read that will save you 5 days in the loan process!
You are in contract. You have all types of deadlines: property inspection, loan contingency, close of escrow, etc. Let’s face it – this process is stressful!
How can your stress be reduced? One way is by working with a mortgage lender who lets you know upfront about what you will need to provide beyond the obvious: paystubs, W-2s, and bank statements.
Here are ten action items you can perform prior to making an offer to mitigate the stress during the escrow period.
1. Are you a renter? – provide the most recent 12 months of cancelled checks (copies of the front and back of the check), and/or the name of the property management company.
2. Are you going to hold title in a trust – dig out a copy of your trust (along with any amendments).
3. Are you going to use retirement funds for either the down payment, closing costs, and/or cash reserves – provide a plan summary that documents the terms of withdrawal (this usually takes some searching, so be prepared!).
4. Are you going to use funds from a bank account of a business you own? Provide a letter from your tax preparer stating that the withdrawal of these funds will have no negative impact on the day –to-day operations of the business (this can be a deal killer because tax preparers do not like to write this letter – it puts them on the spot!).
5. Look at your bank statements – do you have non-payroll deposits that cumulatively add up to greater than 20% of your income? Provide copies of these checks along with a written explanation of each check deposited.
6. Do you own other real estate – provide copies of the tax and insurance bills for these other properties because the lender will include these payments in your debt-to-income ratios.
7. Is your income on pace to be less than your income from the previous year? Write a letter explaining why your income has declined.
8. Do you own your own business? Prepare a year-to-date profit and loss statement.
9. Are you getting a gift for the down payment and/or closing costs? Get a gift letter, a copy of the check, a copy of the deposit receipt into your account, and a current bank statement from the gift giver from the account the check was written from.
10. Most important! – Respond quickly to your lender’s requests! Time kills transactions! Instead of bellyaching about the documentation requested – focus on the big picture – you are going to own a new home!
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Phil Caulfield NMLS #386911 APMC #1850 has been helping people obtain mortgages since 1985. The views, articles, postings, and information listed at this website are personal and do not necessarily represent the opinion or the position of American Pacific Mortgage Corporation.