Ensuring a smooth mortgage transaction

There will ALWAYS be bumps along the road to obtaining a home mortgage. However, there are some things that you can do to make the process go as smoothly as possible.

If you haven't looked at your credit report recently, I suggest you do so. Make sure that everything you see on your credit report is true and accurate.

It will be very helpful to the loan officer, and will speed things along, if you have all of the required documentation gathered and copied ahead of time. If you are applying for a full-doc loan, here is a list of documents you should gather:

If you are paid either by the hour or by salary, here are some of the things the loan officer may ask you to provide:

-Copies of paycheck stubs covering the most recent full month
-The last two years W-2s
-Bank statements from the most recent three months
-Either canceled rent checks and/or the contact information of your landlord
-They will ask for a two year employment history, including how much you made, and the name, address, and contact information of your employer(s)

If you are self employed, here are some of the things that your loan officer may ask for:

-Business license or proof that you are self employed
-A letter from your certified public accountant stating that you have been self employed for the past two years, the nature of your business, and what portion of your business you own. They may also ask for other statements from your CPA.
-Sometimes you can use business bank statements, but you will only be allowed to use 70% of the total deposits for income. You may also use one or two years worth of personal bank statements, in which case you can use 100% of the deposits. Not all lenders have bank statement programs. If you use bank statements, you will need one or two year’s worth of bank statements, including all pages.
-You may be asked to show two years worth of business tax returns and/or profit and loss statements

For all borrowers, you may also need to show:

-Savings, retirement, or investments for three months
-Cancelled rent checks or contact information from your landlord
-If you have had a bankruptcy, you may need to provide a copy of the discharge papers
-If you are using child support, you may need to show a copy of the divorce decree and/or deposits showing that the support has been made


If you are unable to provide income documentation, you will probably need to get a stated income loan.

Be absolutely sure you know what you are getting into when you get a mortgage. Reallize that you are obligating yourself to repay a very large debt. If you have a spouse, make sure the two of you are on the same page about whether or not this is something you want to do.

Disclose all financial skeletons upfront, such as child support payments, wage garnishments, liens, other open debt (not showing on credit report), etc. These WILL come up down the road, so you might as well resolve them now.

Always return phone calls from your loan officer A.S.A.P. Not doing so could result in serious delays in getting your mortgage.

Do not spend money, move accounts around, or change your financial situation until the loan closes, unless you first speak with your loan officer about it. Doing so may affect your eligibility for a loan.

Continue to pay your current mortgage and all other debt until your loan closes.

Be available to sign your final paperwork. Try not to go out of town. If you do, let the loan officer know. If they can't get ahold of you, they may think that you are trying to avoid going forward with the transaction.

One or two days prior to settlement, you may want to inspect the property one last time. Be sure all items (appliances, etc.) are in order as agreed on the purchase contract.

On the day of settlement, all those on title need to sign the closing documents (unless a valid Power of Attorney is granted). Be sure to bring valid photo identifications. Be prepared to spend two to three hours at closing.

Be patient, a mortgage is a very detailed transaction and can become quite tedious at times. Ask your Broker to fully explain everything to you and ask any questions you may have, if there is any part of the process that you do not understand.

One of the most important things you can do to ensure a smooth mortgage experiance is be 100% honest with the information you provide. Not only will falsifying information on a mortgage application cause possible delays in your loan, it could also land you in prison.

During the underwriting of your loan, it is possible that your mortgage professional may ask for additional documentation. It is important to provide these as quickly as possible in order to ensure that the loan will close on schedule.

If you think that you may be quitting your job soon, try to wait until the transaction is completed. Many lenders will do a verbal verification of employment right before the closing to make sure that you are still employed. A change of employment could result in the loan not closing.

Do not go out and obtain new debt, apply for new credit cards, or go out and buy new furniture on a 12 months no payment type deal in order to ensure a smooth mortgage transaction. If the lender decides to check your credit again before closing, which does happen, if you have obtained any new debt they will add this into your debt to income ratio and it may prevent you from qualifying or increase your rate or risk to the lender. Even if you buy something with a 6, 12 or 24 months, no payments due, type of deal they will still take this into consideration into your debt ratio and they will most likely use 5% of the balance for the payment amount. Therefore, always consult your mortgage consultant before making any new purchases or appying for any new debt.

If anything comes up during the process, inform your loan officer immediately. He or she will know how to best handle the situation and will know if it will affect your loan approval.

Understand that it often seems there is very little happening on your loan until 2-3 before closing. Then there is a flury of activity and sometimes several phone calls to you from your mortgage professional, the processor and even the underwriter.
Underwiters will notify loan officers several days ahead of time of conditions that must be met before your loan can be cleared to close. However, they often don't review those conditions and your documentation until 2 or 3 days before closing. They will also reverify employment and may reverify deposits. At this point they may issue new conditions.
Don't take this flury of activity as a sign that your loan is in jeopardy. It is just everyone shifting their focus to your loan to make sure it closes on time.
Even last minute conditions can often be satisfied by bringing appropriate documentation to the closing table.

» DISCLAIMER: The information contained in this article on 'Ensuring a smooth mortgage transaction' is a collection of contributions by licensed mortgage professionals and is not the opinion of Broker Outpost LLC. Always consult a licensed professional before applying for a mortgage.