How to prevent delays when applying for a mortgage
Actually, the last thing you want to deal with is having your mortgage application turned down, but that goes without saying. The truth of the matter is mortgage bankers still have plenty of money to lend, but there are certain regulatory hurdles – both put in place by the industry and the federal government – that must be cleared before a loan is approved.
It’s in the borrower’s best interest, then, to provide a loan officer with all the necessary information to expedite the approval process. Justin Moore, president of the Mortgage Bankers Association of Arkansas, has some advice on what information lenders need from applicants – gathering that information on the front end can save a borrower a lot of time and trouble down the road.
Moore said it’s important to realize that a consultation with a loan officer must not necessarily be in person. More often than not, putting in an application over the phone is just fine. Whether you meet with an officer in person, however, the integrity of the information you supply is very important.
First of all, having just basic information on hand is important. Delays occur when applicants can’t readily provide the dates of birth, Social Security numbers and accurate work and residence history for both borrowers. If a husband and wife are applying, the loan officer needs to know both residences and work histories covering, generally, the past two years for the applicants.
Moore said that work history must include accurate salary histories. If, for example, a borrower earns $10 an hour but routinely works overtime and receives annual bonuses, those details need to be revealed. Don’t just reveal a lump sum for income – make sure to state the total regular wages earned, overtime pay and the amount of all bonuses. Also, make sure you have last year’s W-2 forms ready, the past couple of pay stubs and all bank account numbers on hand.
Speaking of salary history, Moore said the applicant needs to let the lender know about any part-time jobs, side businesses and any sources of income. Throughout the application process, the borrower needs to let the lender know about any layoffs or new jobs, too. And if there’s a lawsuit pending or one that’s been recently settled, the borrower must divulge that information.
If you’ve already found that dream home and have it under contract, the loan officer needs a copy of the fully executed sales contract and a quote from the company that will provide your home owner’s insurance. If you plan to put a down payment on a home – a requirement for most loans these days – the loan officer needs to know the source of money for that payment. It’s fine if that money is siting in a bank account, will come from the sale of stocks, is a gift, will be taken as a loan against a 401(k) – the loan officer just needs to know the source of that money as he or she will have to verify it during the loan process.
Just remember that the loan officer will have to verify the information the borrower provides. You can make that job easier by providing accurate information and, thus, speeding up the approval process. Delays in that process can lead to stress and, perhaps, problems in closing on your home in time. Who wants that?
Home Sweet Home is written by Ethan C. Nobles and is distributed weekly by the Mortgage Bankers Association of Arkansas.
Benton resident. Rogue journalist. Recovering attorney. Email = Ethan@FirstArkansasNews.net.