The most common question these days when asking clients to provide a specific document is “Why do you need this?” With the tightening of guidelines whether you are doing an FHA or a Conventional loan, at some point you may be asked to provide documentation that you feel is intrusive or unnecessary. For all loans you always need to supply paystubs (covering the last 30 days), bank statements (ALL Pages), last two years W2’s and last two years tax returns (ALL Pages). FHA requires two months bank statements and two years tax returns but usually only one month and one year for conventional but again nothing is written in stone. Be prepared to be asked for additional documents. And when supplying the documents send ALL pages, don’t think that just because it seems irrelevant to you doesn’t mean it is irrelevant for the underwriter. A good lender will think ahead and project what a underwriter may ask for in order to help alleviate trailing documentation throughout underwriting process. They will try to get as much as they can upfront.
You must also prepare yourself for being asked to supply explanations and/or extra bank statements, checks, deposits, etc when you show an abnormally large deposit. Meaning if it is not your payroll direct deposit and it is not an amount that happens on a regular basis, you will be asked to provide what it is. Why? This is important because underwriters want to know that you are not getting another loan or taking out a cash advance on a credit card or proving your not getting funds from your realtor or lender to do this loan. Thats why this is important! Make sense? This also applies to “gift” funds if you are receiving funds from a family member for help with your down payment. They will need to provide documentation of wiliness to gift, or copies of statements from where funds are being withdrawn to gift, and ALL pages, and if any abnormally large deposits or cash deposits are showing they will need to provide the trailing documents to explain.
My best advice is just be prepared to gather all the requested documentation your lender asks for. Why? Because they said so! Remember they are on YOUR side, they are working for you.
Another note, you may also be asked to provide further documentation AFTER closing! I know it sounds crazy and seems that this should not happen, but there is still another processing after closing, it is POST closing. And many investors will ask for clarification on certain documents and require a few more documents. This is super important, it doesn’t mean that your lender didn’t do their job or that the underwriters didn’t do it correct the first time, it just means the investor wanted just a little bit more than what the underwriter thought was sufficient. So my bet advice is give your lender some slack, and think of how they helped you and it is your opportunity to give back and help them.
Make sure to take a check my loan application check list, this can help you in pre-gathering your needed documents for your lender. Click here if you would like to complete a secure online loan application.
As always, please give me a call or email me if you have any questions.
Summit Mortgage Corporation