For many people, buying a new home or refinancing is the most complex financial transaction they’ll ever make. With the amount of information and documentation required to complete a loan application, chances are some things will be missed or forgotten the first time around. Omitting important information or partially filling out a form are common mistakes people make at the beginning of the mortgage process. And though these hiccups may not be deal breakers for getting the rate and product they want, it’ll slow down the process, costing time and possibly money.
Here are some useful tips for submitting a clean loan file and what homebuyers/homeowners can do to avoid mistakes and speed up the process.
Report accurate income.
Knowing what income can actually be used on the application is a recurring issue. This can be a huge source of misunderstanding for homebuyers. For many programs, we can only use base income if we have a two-year history of bonuses and commissions. Any additional income that they may receive—alimony, child support, tips, etc.—cannot be used if it isn’t reported on the previous two years of tax returns.
Tell your loan officer everything.
When it comes to your loan application, it’s always in the best interest of the homebuyer to let us know your complete situation so we can put you in the right loan product. Even if you don’t think some info is relevant. Now, we may not need to know about every asset or require documentation. Some borrowers qualify with just the funds in their bank accounts, so it may not be necessary to dive into all the assets they have. It just depends on the situation. But, not all of the responsibility is on the borrower; I’ve always been of the mindset that it is the LO’s responsibility to expand upon what is asked in the application. Delays happen when we don’t have all of the necessary information up front and have to backtrack.
Don’t try to hide debt.
Buying a new home without disclosing debts or debt history is next to impossible. We understand is may be uncomfortable reporting certain things, but we’re not here to judge. We just want to help you buy a new home and make it as easy and fast as possible. Whether it’s tax liens, a judgement against you, bankruptcy, whatever—all debts and negative financial impacts need to be reported. Believe us, we’ll find them eventually, so for the sake of time it’s best to get it all out there from the start.
Provide all the details.
When asked for bank statements and tax returns, each side of every page must be submitted. It may be apparent that only the first few pages of a given statement have the information we need, but we have to verify all information, not just that which the borrower deems relevant. There may even some blank pages in your bank statement, you should always submit every page because we will need to see it before we can send the application for approval. And, when the two most recent statements are requested, one from July and one from February won’t work. Attention to detail is especially important for homebuyers who are self-employed or own investment properties. They will need more documentation than those with W-2s so it’s important for them to ask their LOs for a complete application checklist at the beginning of the process if they aren’t provided one.
If you have any questions about your loan application, always reach out to your LO. We’re here to make this process as simple as possible for you. Here’s a short video that shows why it’s always better to be “certain” not “pretty sure” you have everything in order: https://p.widencdn.net/qj6gy2/V-Video-RocketProTPO-PartnerSBSpot-QualifiedHomeLoans-PP1953652-ROCK1642100H?download=true