Mortgage Underwriting 102

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About the Author:  Chuck Walden (NMLS #148160) is a loan officer with Prospect Mortgage.  Email Chuck at chuck.walden@prospectmtg.com or call 678-725-8076. Website is www.ChuckWalden.com 

Now that you have chosen your loan product and your new home, what happens next?  Gone are the days of providing a couple of pay stubs and bank statements.  Each individual situation is different.  Your life “picture” will be looked at in order to determine what items are needed for underwriting.  Typical items will include but are not limited to:

1)  2 years of tax returns – Specific items that will be looked at are – do your tax returns match your W-2’s?  Are there any unreimbursed business expenses on the 2106?  If self employed, did your business have a profit or loss?  Is the rental property you own mentioned on your return?

2) 2 months of pay stubs – Specific items that will be looked at are – does your year to date income make sense?  Are there any repayment of loans mentioned?  Does your salary or hourly wage match what you told your loan officer?  Are there any bonuses or overtime wages?

3)  2 months of bank statements for any asset listed on the loan application – Specific items that will be looked at are – does your bank statement show any deposit that is not payroll related?  If so, where did the money come from?  Be prepared to write or type a letter of explanation regarding these deposits and proof.

4)  A written or typed letter indicating why you want to purchase the home

5)  Proof of rent payments – if you are currently renting from an individual, you will need to provide 12 months cancelled checks showing that you have been making your payments on time.  If renting from a company, you will need to provide contact information so they can confirm payments have been made on time for the last twelve months.

6)  A copy of your unexpired drivers license

7)  A credit card number – this is to order the appraisal on the home you are buying.  Appraisers are paid directly with this credit card before they will view the property

8)  Bankruptcy papers – if you have declared bankruptcy, you must provide the complete bankruptcy package along with the discharge paperwork.

9)  Divorce Decree – if divorced, you must provide the complete divorce paperwork package

What we are trying to accomplish is to present a “picture” of you, the home buyer, to the underwriter. Underwriters do not speak to the buyer, so we need to present a story that says, this is John Smith, this is what he’s about, and this is why he wants to buy the house.

It’s always a good idea to contact your loan officer before you start looking for your new home.  He or she can tell you where you stand, how much you can afford, and if something needs to be addressed.  Also, have all of your paperwork ready at the beginning for review.  I promise it will take the drama out of your home buying.

Apply today at www.chuckwalden.com .  Call today at 678-725-8076.  Email today at chuck.walden@prospectmtg.com

 

 

 

 

 

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Is Now a “Scary” Time to Sell Your Home?

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Is now a scary time to sell your home? (Excuse the pun and Happy Halloween).  No it’s not and let me tell you why.  Now is the time that you will get the most face time with potential buyers.  I held 18 open houses during the month of October and the number of open house attendees has dramatically improved over this time last year.  Also, as you know, the number of potential buyers searching for homes online is increasing every day.  What if we were in an increasing interest rate environment?  Would fewer people qualify?  Would more people be looking to buy before rates get too high?  We are….yes….and YES.   Due to the daily changing environment of the mortgage world, now is the best time to sell.  With increasing interest rates, fewer people qualify and the ones that can afford it may get “scared” away with a much higher payment.

It’s almost impossible to time the market.  All you can do is deal with the facts.  Whether you are looking to buy or sell, I would say that now is the time.  There are too many market indicators pointing us in that direction.

Were our Grandparents right about homeownership?

For decades, grandparents have passed on the knowledge that the best investment you can make is homeownership.  You will have a fixed payment for 20 to 30 years.  At the end of that term, you can live without a house payment. If you need the money, sell your home and rent.

Even though the housing market started to crash in 2006, I believe that our grandparents were right.  Let me give you some examples.  Home prices have gained 42% since 2000.  The market has lost 4%.  According to Trulia, it is cheaper to purchase a new home in 72% of America’s cities than to rent.  In case you haven’t heard, interest rates are at all times lows.  With low rates and low values, you are getting more bang for your buck and keep dollarsin your pocket.  One thing is sure.  Rates and values will start to rise.

I wanted to talk about this today because I know a lot of people are on the fence and are trying to time the market.  Now is the time.  Don’t hesitate … make a decision.  Homeownership is an American dream that we shouldn’t take for granted.  But, just like our grandparents once told us, it is the best investment that you can make.

Related articles

• Is homeownership still part of your American Dream? (sfgate.com)
• States With The Highest (and Lowest) Homeownership (247wallst.com)
• Rental Investments Are Thriving as Homeownership Is Dying (investorplace.com)

Hilarious Public Service Announcement

Take three minutes and watch this “spoof” about buying a home.  It’s hilarious!