Mortgage Monday

Sure seems like it these days, doesn’t it? It is worse than it ever was to apply for a mortgage; almost feels like a second job. Seems like every time you take a breath, the loan officer is asking you for more stuff? Stuff that you swear you already gave them. You might have, but perhaps you left off a few pages because you didn’t think it was necessary or the documents simply got stale (because the loan took so long to close). Well here are five of those super annoying things you need to produce to the bank, some more than once and why.

Copy of a valid current government issue ID After 9/11, President Bush instituted the Patriot Act. One of the regulations it covered was a way for financial institutions to review assets and bank accounts to insure money was not being laundered and used for terrorist activity. All consumers must sign a release for the lender to do a check on them as well as produce valid photo ID. Valid ID is considered government issues and current. Things like a driver’s license or passport are the best; student ID’s and library cards are not acceptable. Please make sure it is a clear, faxable copy or you will be asked to send it again. Oh, and bring it to the closing, because they check again to make sure you are who you are.

Updated paystubs right before the closing Paystubs and employment information goes stale after 60-90 days. If your closing does not happen within that time period, the lender will require an updated stub. So, keep them handy and find out when you need to send another one in. Also, the lender assumes nothing will change such as a 401k loan paid through your paycheck or a decrease in salary. If there are changes, make sure you tell your loan officer and hope that you still qualify for a loan. Oh, and don’t quit your day job, because the lender will be checking to make sure you are still employed the day before the closing.

Every single page of your bank account statement Truly, even if the last page, or the back of the pages are blank or just contain boilerplate information, the lender wants to see them. The last pages of the statement can contain loan information not revealed on a credit report. Copies of checks paid or debits made during the month might reveal a financial secret you are keeping from the lender. Just to be safe, scour the statements before you pass them on and don’t do any weird money transferring, right out big checks or close account until after you close your mortgage.

More than just the first two pages of your tax returns Lenders want to see your federal tax return including all schedules. Make sure that you also include W-2s, K-1s, 1099 and any other income statements you receive and use for your tax calculations. Schedules A and C are very important and the lender will want to see what you expense out. If you are self-employed, more than likely you will need to produce business returns also, so just be prepared. FYI: After April 15th, 2012, lenders will require your tax returns so try not to extend with an explanation.

Receipt for at least six months paid homeowner’s insurance Lenders need to make sure that your taxes and homeowners insurance are paid current at the time of closing. Typically that you are covered for at least six months of homeowners insurance so they can sell the loan before your house burns down with no coverage. So, even if you don’t escrow and pay your own taxes, show them the paid receipts. It helps if you show this all upfront.

So, you see lenders are not looking for your first born, just a little blood, sweat and tears. Be prepared, its less painful!