When you apply for a mortgage there’s a short list of stuff we’re going to need to see… and then, as we get further into the Mortgage Process, that “Scavenger Hunt” list of items we want to see gets longer, and longer. Depending on the Type of Mortgage you are applying for, the COMPLETE Mortgage Application Checklist can be REALLY freaking long (unfortunately).
As a challenge, I wanted to see just HOW LONG I could make the Mortgage Application Checklist. (I’m laughing as I write this!) In actuality – we really just need your most recent pay-stubs (that covers one full month), your last years worth of W-2s, your full / all pages bank statement. With those few docs, we can usually get started, and then we’ll ask for some of this other stuff within a few days.
Go ahead and look over this Mortgage Application Checklist, and see what you can pull together. Thinking of it as a Scavenger Hunt now, will be MUCH easier, than trying to figure out where something is at the last minute… when it’s all in boxes, or you threw it out, trying to make it easier to move!
Once you make loan application, just keep a folder near your phone or computer that reads something like “they MIGHT need this” and then throw EVERYTHING you can find into it!
COMPLETE Mortgage Application Checklist 2015
- 2 years Tax Returns, Federal/State/Business, all pages. That second page needs to be signed by all borrowers
- If you are Extending 2014, send the extension, and include the 2012 returns so we have 2 years and the extension
- W2’s for all jobs for 2013 and 2014
- If there’s a gap of employment for more than 30 days, go ahead and write a letter, sign it and date it, explaining the gap
- One month recent pay-stubs, keep sending ’em through closing. We will eventually want the most most recent copy.
- 2 months’ Bank statements, all accounts, all pages, even that last page that reads “intentionally left blank”
- If you have more than enough money to close in one or two accounts, we might not need the “little ones,” you have for your kids, just check with us
- REFINANCE: Please have the Declarations page from your homeowner’s insurance policy, a payment statement for all mortgages on the home, and the TITLE insurance, if you can find it. It should be with the closing papers from your previous closing – a HUD1 Closing statement would also be REALLY helpful (these things save you money on your refinance)
- Retirement accounts – pdfs are much easier to read, so scan them in to us, please. Screen prints don’t always tell us it’s YOU and provide us an account number. We’ll need all pages for these accounts too. If you only get them quarterly, that’s fine, but we need the last quarter. So if you apply in February, and close at the end of April – someone’s likely to request the statement you get at the end of March / beginning of April.
- Gift Funds? If you are lucky enough to have someone giving you money to buy a house, well that’s awesome. But there’s paperwork involved, and a gift letter that we’re going to need.
- Selling stuff on Craigslist so you have enough money to buy a house? Large deposits have to be documented too.
- Contact info for landlords for past 2 years if you’ve been renting, if you live at home – we probably don’t need a letter from your folks saying what a good kid
- Copies of your cancelled checks for rent payments for the past year – if you’ve been paying rent in cash, or if the checks do not perfectly match the rental agreement, or you pay part of it and someone else paid part – it’s going to need to be documented, so get ready.
- Employers for past 2 years, full contact info. We’re going to call your current employer to verify you still work there a couple of days before closing, so we’ll need a real live person we can talk to. If you applying for a First Time Home Buyer Grant, we will be required in writing every employer for the past 24 months.
- Drivers License and SS card, Green Card if you are a Resident Alien
- If you are a non-Resident Alien, we can still do this, but we need to talk
- Divorce Decree, all pages, if applicable. If you are Separated, we’ll need to see that recorded document too, and maybe a free trader agreement if it’s not in the Separation agreement.
- Proof you are actually receiving child or spousal support (check copies)- also, it must be Court Ordered.
- If you had a Bankruptcy, we’ll need the discharge papers. If you had a foreclosure, remember that we are looking at the date of transfer, not necessarily the date you were notified of the foreclosure (these can be months apart).
- We may even need all of the Bankruptcy papers to show what was in the filing, and what was not. #Fun
- Social Security /Disability Award Letter – the one you get every year saying “this is how much you get”
- Proof of continuance of Disability
- VA: DD214. We will get your Certificate of Eligibility updated for you, if you give us time.
- VA Disability letter, if applicable. God Bless you and thank you.
- Self Employed? We’re using Line 31 of Schedule C’s, if you are a sole proprietor. If you have a Partnership, or are Incorporated, we will need the full business returns. We also need the K-1, Articles of Incorporation, proof of when you started the business (which we usually get from the Secretary of State Office), if you shifted from self-employed to a W-2 job, or vice versa in the past two years, strap in, there will be lots of questions.
- We need a business phone listing, in most cases. For gosh sakes, if you don’t have your business on Google by now – take a minute. Create a FREE LISTING on Google Places, use a GOOGLE NUMBER that’s also free and forward it to your cell phone. Make it easy for us to see who you are!
- Bonus Income? Go ahead and dig up the end of year pay stubs for the past two years so we can average them. Don’t have December 2013 pay stubs? See if your payroll department can get you a copy. I’m sure you don’t kept them, laminated and handy right on the refrigerator, but a W-2 gives us TOTAL income, not your bonus broken out like a pay stub does.
- Same deal with W2 income that includes overtime
- Part time Income = any income where the employer will NOT say that you are designated as Full Time with a guaranteed minimum of 40 hours per week. We’ll have to verify darn near close to 2 years of continuous employment for all mortgage programs, including FHA which is the most “understanding” of second jobs.
- Pregnancy leave? We’re gonna need the kid. Not really. IN most cases, if you are pregnant, and leave DURING THE LOAN PROCESS on maternity leave – we simply have to prove that you are still an employee. Employers are not allowed to disclose that you are out on any type of medical leave, only that you work there.
- New job? How new? Are you Contract or really full time? It can be a Can of worms – but we get so many people who move to NC with a new job, we pretty much have this down to a science. In some cases we need a full month’s worth of pay stubs, and in others we don’t. So ask.
- Buying a home with a wood stove? Check this out: If it is not Certified, or certifiable, it will have to be removed and the hole capped. Then after we close, nobody really cares if you put it right back. I didn’t say that.
Mortgage Loan Application – Letters of Explanation
First off, when we ask for a Letter of Explanation, it’s literally a Letter that Explain things are referred to in “Mortgage Speak” as LOEs. Many folks figure it’s that little extra that will help the Underwriter understand that they just need to use some common sense to approve the loan.
- Letters of Explanation. These can literally be one sentence at times, and they tend to 1) Document the obvious and 2) really annoy some folks who are asked to write them – sorry. Make sure you hand-sign and date them.
- Credit: We have a “blanket letter” we have you sign when you apply for a loan. The Underwriter wants an account for every single Inquiry on your credit report, including the one made by OUR bank – the one you are applying for a mortgage with RIGHT NOW.
- Late Payments normally don’t require a letter any more. Either you have the credit to buy a house, or you don’t. IF YOU ARE CLOSE, we might ask you to help us show that a bad thing happened to you, but that bad thing is in the past and won’t come back again.
- Job changes, gaps in employment, inequities between paystubs and deposits, inequities between W2s and Verifications of Employment (VOEs)
- BANK STATEMENTS – THIS IS AN UNDERWRITER FAVORITE: Every deposit over, say $300, on any of your bank statements, that cannot be readily connected to payroll or some form of income must be fortified with: a Letter of Explanation describing what happened, and why. THEN a copy of the actual check and deposit slip from that deposit will be requested. This is REALLY a PIA when you have been selling stuff, or babysitting for a week – or painting a friend’s house to make some extra money to buy a house. Make the Mortgage Process easier – and try not to transfer money around within accounts we are using to show you have enough cash to close.The real fun here is if you move your own money around, then we need THAT statement from whence the deposit came, and ….wait for it….. Then THAT statement will be inspected for deposits over $300, and down the wormhole we go. ESPECIALLY if it’s an account you had in another STATE, and then you moved here, and you have to get copies from the “old account…” It can be a huge problem.
- This is typically where we know everybody is really just ‘Over it” – but it’s not like it’s JUST OUR COMPANY, unfortunately, we live in POST Mortgage Meltdown times. EVERYTHING has to be documented.
- If you are flying solo and your spouse or anyone else’s name is on your bank statements, we need a letter from them saying you have full access to all funds in the account
- If the credit report has a HAWk flag, or shows a business at that address from whenever, you need to write an LOE explaining that you have no idea what the Hell that is.
- OK, we can’t believe this is still our job. We drink lots of coffee here.
Miscellaneous Mortgage Loan Application Tips:
- USDA? How many humans will be living in the house? We need tax returns for all of them, on the loan or not. You can’t make too much money. You have to make enough, but not be over the limit for the county you’re buying a house in. It’s called USDA Home Loan NC HOUSEHOLD income.
- Same with various Grant programs – but then at least ONE of those Mortgage Grant programs only looks at the Applicant’s Income, so that helps.
- USDA/VA have tighter guidelines, as do some of the Mortgage Down Payment Assistance programs, because the lender is walking into the thing upside down due to the rolled-in PMI fees. Get ready for nit-pickiness regarding all things, especially if your credit is below 680.
- Is that a condo downtown you want to buy? There’s additional paperwork we need to verify that you can get a”regular” mortgage on it. Most Condo Home Owner Associations in our state do NOT keep up with the documentation required, it can be down right tricky to get a condominium approved these days.
- Regardless of your credit, your lender should work with you to enhance your scores and optimize your situation prior to Lock. We’ve worked with people for more than a year to get their scores up!
- A Rate Lock is when your lender Locks in your rate. This means that you are guaranteed that rate for x number of days. SOME lenders have a one-time float-down, meaning if the market improves substantially, they will reset the rate at the improved mark. Most do not.
- The longer you lock your rate for, the higher it is. Usually it’s 30 days.
- Don’t obsess over .125% movement. Obsess over everything above this bullet point, and whether your lender can walk and chew gum… there’s more to shopping for a mortgage than just asking about the mortgage rate.
- Ask your Loan Officer how long they have been doing Purchase loans if you are buying. Many, many LO’s have been handling refinances only for years, and Purchase is a completely different animal. If you talk with a few lenders, you will be able to sniff out the newbie.
- Ask about their “turn times” – this relates to processing and underwriting AFTER you have provided most of the above.
- Remember, the “clock” does not start until you have provided most of the above.
- If a lender asks you for $$ during your first conversation, run.
- You should only remit $ for the appraisal AFTER you have reviewed the Opening Disclosures package to the point that you understand it and are comfortable. Then the appraisal fee is anywhere from $400 to $700.
- Your lender will not know your Cash Due At Closing (purchase) for a few weeks. They should be able to ballpark it, but a lot of work has to be done by other parties, which they then collate.
- We are going to pull your credit AGAIN within a few hours of closing. So don’t buy a sofa, a refrigerator, etc. until you have the KEYS to the house!
- DO NOT SCHEDULE MOVERS ON THE DAY THAT YOU ARE SUPPOSED TO CLOSE. DEAR GOD, DO NOT DO THIS. This is a process. Work with us, then write the contract so you have a day or 2 after you sign docs to get out of your house. Ditto with trying to close at 4pm on a Friday so all your buddies can help you move in. Schedule it for Weds. Give yourself some time. Also – trying to close on a house RIGHT BEFORE you get married might not be the best life choice either?
This is an exhausting mortgage application checklist – and I guess somewhere in putting this together, I got caught up in trying to tell you what the PROCESS is like, which can also be exhausting – especially if you have everything boxed up. Many times, issues come at you like a snake out of a can. We tell folks that unfortunately, we feel like we’re playing “Whack-a-Mole” when we’re helping folks. But the fact is, you send us something, and that document causes the Underwriter to ask questions.,
Plus, if you are applying for a USDA Home Loan with a Mortgage Tax Credit – you are literally having your mortgage file underwritten 4 times!
So take our calls, please do your best to find the items someone is asking for to complete the Mortgage Application – even if you feel like it’s none of our business, or that last thing you just sent should have taken care of it. Keep breathing. You’re going to get through this. One day, down the road, you’ll think of this process, and likely throw furniture… just kidding. Keep your eye on the Goal! You are going to be a HOMEOWNER!
Here’s what a client said about us yesterday:
“Hey Steve! Just an FYI…I posted a Review on Zillow for you, earlier today.
Thanks again for everything you did for my wife and I in the purchase/loan process.
I’ve been in the Financial Services industry for about 18 years, now…and I would not hesitate in saying that you’re a real professional. I’d rank you with the top folks I’ve ever met in this industry.
Thanks, again for everything.
See? Some folks get through this, and love us. My point is, be prepared for us to ask you for stuff. Make a folder, start putting things in there for us – and it will be just fine! Have more questions about the Mortgage Loan Application checklist – or what you can expect during the mortgage loan application process? Call Steve and Eleanor Thorne 919 649 5058 – and connect with us on Twitter, Facebook or Insta – we’re here for questions! We want to help you buy your next house in North Carolina!