Tri-Valley Mortgage News

When you apply for a home loan it's important to know what will be expected of you to provide. Gone are the days of "limited", "stated" and "no doc" lending - no longer does a decent credit score and a healthy pulse virtually guarantee you favorable financing. Indeed, the pendulum has swung to the other end and now many loan applicants feel the lender wants nothing short of their first born in order to get the loan funded. It's true, lending guidelines have tightened up considerably in the current market. Therefore knowing in advance what a lender will need from you as a borrower will put you ahead of the game when preparing to apply for a home loan.

1. Loan Application: if you want to hit the ground running a great place to start would be to fill out a loan application to the best of your ability prior to your loan application appointment. Yes, that may sound redundant but familiarizing yourself with the different facets of the application will a) give you a better understanding of the kind of information that is pertinent to the loan transaction and b) give your loan officer a lot of useful information up-front that he or she would otherwise have to take the time to get from you during your application appointment. This frees up lots of time to discuss other important aspects of your loan process and also hopefully shorten the length of the appointment. Most loan officers would be happy to send you a loan application ahead of time for you to complete. We have a simplified mortgage application questionnaire that we like to have our clients fill out. It goes more in-depth than the typical application but it gives us a wealth of information to help us determine the very best program for the client. You can find it here.

2. Income Documentation: if you are a salaried individual or paid hourly, you will want to gather your most recent 30 days' worth of paystubs to give to your lender. You will also want to give your lender your last 2 years' worth of tax returns. But you only need to provide the Federal returns, not the State. Also, include the last 2 years' W2s or 1099s. If you are self employed you would just provide the tax returns and a current year-to-date Profit and Loss Statement and Balance Sheet. Please be aware, if you are self-employed, that you must be able to provide evidence that your are currently still in business via current business licenses or public listings such as 411.com. Lenders are very cautious given the current economy in ensuring that a self-employed borrower's business is still thriving and viable.

3. Asset Documentation: In addition to the above, you will need to give your lender at least the last 2 current months' bank statements. Be sure to include all checking and savings accounts. You'll also want to provide your most current quarterly stock, mutual funds and/or retirement account statements. Of course, if you receive these monthly, then provide the most recent two months' worth. These are all to determine where your down payment will come from if you're applying for a purchase loan.

4. Legal Documents: Have you been divorced? Do you have a bankruptcy in the past? Neither of these occurrences automatically disqualifies you for a home loan. But providing your lender all related documentation can greatly improve the chances of your loan going smoothly. If you are providing either bankruptcy or divorce papers please provide the final judgment/discharge as well as all supporting schedules. In a bankruptcy it is incredibly important that the schedule of included debts is provided. If the bankruptcy is a Chapter 13 repayment structure, then you will also need to provide the payment history which your attorney should be able to provide. By the way, on an FHA loan, as long as your attorney gives permission, you may get a loan even if you are still in the repayment phase of the bankruptcy as long as you have paid on time!

5. Your landlord's Information: If you are currently renting you will need to give your lender the name of your landlord, his/her/their address and phone number. This is so the lender can verify that you pay your rent on time each month. Be aware that if you rent from a family member you may have to provide cancelled rent check to prove this - most lenders assume that a family member would give you a favorable rating whether or not it' the truth! This is not to be confused with if you live with your parents and just contribute to household expenses. If this is the case, then it's most likely you will need to go with an FHA loan which does not require a rental rating in this case.

6. Finally, if you are refinancing, you'll need to bring your lender copies of your current mortgage statement(s) and hazard insurance policy. Although there are probably more items the lender will ultimately request from you, this list is the "common denominator" - most applicants will need to provide this information regardless of the loan they are applying for. If you have these at the ready during your initial application appointment, your lender will most certainly be impressed and the pre-approval process will move forward much more smoothly.