Step 2. Gather and review Support Documents

Mortgage underwriters are not allowed to clear loans to close without reviewing support documentation that matches the information on the loan application.  The Pre-qual process sets the stage for Step 3, Pre-approval. 

A Pre-approval is not the same as Pre-qualification.  In order to run a valid underwriting scenario for the Pre-approval step we must review all of the support documents.  The basic information entered in the loan application in Step 1 is updated and completed using the details from the support documents.  If the information in the loan application does not match the data from the support documents the Pre-approval is not valid.  

Not reviewing the support documents at this point in the process is a very big mistake. This issue delays the process more than all other issues combined and makes it very stressful for everyone involved. Address this on the front end and eliminate most of the stress!

Basic Support Documents for All Loans

We will need the following items for all borrowers on the loan prior to review by an underwriter:

  1. W2’s & Federal Tax Returns for the most recent 2 years for everyone on the loan, 3 years if using a KHC mortgage or down payment assistance (DAP).
  2. Pay stubs covering 1 month.
  3. Most recent two months of (bank) statements for any account you intend to list on
    the application. We need all of the pages, not just the summary page. If the
    statement says Page 1 of 5 on the first page we need all 5 pages, even if the last
    one is blank. Hint: do not leave off any accounts, the automated system counts
    funds even if not used as down payment, so include retirement, 401k, IRA’s etc.
  4. A copy of the purchase contract on the home you are buying if you already have a property under contract.
  5. If you are selling a home we will also need a copy of the contract on the one you are selling or a copy of the listing agreement if you do not yet have a buyer.

Self Employed

In addition to the items above, for borrowers that are self-employed or own more than 25% of the company they work for we will need:

  1. Year-to-Date earnings or Year-to-Date Corporate Profit & Loss
  2. Two years Corporate Tax Returns

Divorce

Anyone on the loan application that is receiving child support or alimony that is included in the income will need to provide documentation to support how much is being received and the source.  Usually a copy of the divorce decree and property settlement agreement will be needed if you are receiving or paying either child support or alimony.   You are not required to disclose receipt of this type of income, it is strictly optional.  However, if you need it in order to qualify for the mortgage we will need to document not only the source but the actual receipt.  There are two things we must clearly document.  First that you have received it on a regular basis for at least one year and it is going to continue for at least three more years.

If you are paying either of these we need to document the amount and how long the obligation continues.

If any of the money you are using for down payment is proceeds from a recent divorce we will need a copy of the divorce decree and property settlement agreement.

Bankruptcy

If anyone that is going to be on the loan has filed bankruptcy within the previous 7 years we will need:

  1. A copy of the Discharge of Bankruptcy
  2. Schedule of creditors (secured or unsecured)
  3. Detailed explanation from the borrower (I help with this)

Fax the Support Documents to: (502) 753-4727 (No cover sheet needed)

Jim Simms Direct Line: (502) 753-4127
Email: jsimms@cmcloans.com

Time to move forward to Step 3

 

 

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