How can I ensure I’ll get approved for a mortgage?

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How can I ensure I’ll get approved for a mortgage? The short answer, apply for a mortgage. If approved for the loan, this should ensure your status. Interpreting your question a different way, you may be asking, what is the minimum amount of hassle (aka: borrower data collection) to qualify for a home loan? Both question interpretations have some overlap in execution. Let me explain.

EXAMPLE OF LESS PAPERWORK

If you are trying for loan approval with the minimum amount of hassle (less paperwork). There are some situations where this can work. Lets say you have $300,000 in the bank/investments/mutual funds (3 accounts with 100K in each account). Your home loan down payment is $100,000. It is likely, two of the three accounts will need to be verified by underwriting. Perk, no need to furnish the 3rd account.

HOURLY WAGE OR SALARY EMPLOYEE

Realistically, this example does not happen as often as borrowers would hope. Why? Let’s look at an example. The majority of citizens in the US are employees. The majority of borrowers in the US are employees. If you are an employee, earning a wage or salary, you may need to furnish:

  • paystubs
  • W-2’s
  • Tax returns (maybe)

If this is you, the necessary supporting documentation may be minimal.

MORE COMPLEX FINANCES

Maybe, we may need to dig a little deeper. Are you an employee paid hourly plus overtime? What about overtime? Is it consistent? Or is it seasonal? If you are a salaried employee, do you get commission or bonuses? If your commission/bonus is 25% or more of your base pay, tax returns will be necessary. How long have you been earning the commission? More than two years? Furthermore, what about employee business expenses. Do you write off expenses on your taxes? This would bring down your net income. Also, we haven’t mentioned these scenarios yet:

  • self employed
  • A partner of a partnership
  • Owner of a corporation
  • Owns additional real estate

As you may have guessed, a borrower’s finances can be complex.

Asking the right questions can address financial complexity. Your answers to these questions help determine collection data/paperwork. A thorough question and answer period will help greatly with the application process. This, in turn, will be a huge help with underwriting.

BE PREPARED WHEN YOU APPLY FOR A LOAN

I provide each borrower a list of paperwork to bring in. Normally, the borrower will return the list of paperwork before taking a loan application. If this is the case, a proper review of the paperwork is a priority. I want to know if any additional paperwork may be necessary. If yes, I pass along the information as soon as possible.

Now may be a good time for an example. What if the tax returns show alimony/child support payments? Is this important to underwriting? You bet. It can affect the debt-to-income ratio. The loan application may require this disclosed payment. Why am I mentioning this? I good mortgage professional is thorough. This saves time.

Time is precious when it comes to lending money. It is rare that a borrower requests to delay or slow down the home loan process. Most would like to have their loan closed as soon as possible. This leads to an important point. It is my experience some loan originators do not take complete loan applications.

INCOMPLETE LOAN APPLICATION CAN CAUSE DELAYS

Incomplete loan application or short cuts may shave off 15 minutes of the initial visit. But, expect delays on the back end due to this poor habit. Incomplete loan files lead to delays in underwriting. Underwriters will check for omissions or inaccuracy on the loan application. If discovered, the underwriter will want clarity. A common result, additional supporting data/paperwork. Certain paperwork could take days or weeks once requested. These underwriting delays lead to frustration to all parties involved (borrowers, buyers, sellers, real estate agents, loan originators, underwriters, appraisers, home inspectors, insurance agents, escrow agents, parents, children, movers).

PROPER PAPERWORK MAY BE LESS PAPERWORK

The last step, review automated underwriting with the borrower. Why? This can save time with the underwriter. Underwriting should review the loan according to this report (if data is accurate). For example, the report may stipulate one paystub and the most recent year w-2 (no tax returns). As a result, this is worth sharing with the borrower. Borrowers know data that must be provided. But, borrowers seem to like knowing if there is less to provide. I agree. Less paperwork is a nice perk.

CONCLUSION

In conclusion, work with a loan professional that is detail oriented. A complete loan application, supported with all qualifying data/paperwork is ideal. Skimming over borrower paperwork and loan application sections is a common cause of delays and frustration by all parties. Less data/paperwork is not the answer. The proper data/paperwork works best. In some cases, less paperwork may be the result. Take this course of action to ensure you are approved for a mortgage.

Call me direct 714-402-3418 or text me and let’s begin your path towards homeownership in California.

I welcome the opportunity to assist you with a CalHFA, VA, Conventional, Conventional High Balance, Jumbo, Purchase or Refinance Home Loan.

I appreciate the opportunity to discuss your home loan needs.