In a nut shell the three things we would like buyers to know understand and have ready to document is their credit, income and current debt status. Borrower should know that they can legally check their scores free once per year - Freecreditreport.com although this isn't the report we will use for them and the scores will not be accurate, it does give them an idea of what their credit history looks like and an opportunity to start getting erroneous info removed. Number 2 is income, borrower should have their paystubs, w-2's and tax return ready to discuss with their loan officer, it helps cut down a lot of time and makes qualifying a lot easier when borrowers understand what their income actually is. Finally, borrowers need to understand their debt levels. Current lending standards will only allow us to approve borrowers with a max 55% DEBT TO INCOME RATIO. Which means no more then 55% of their gross income can be allocated toward revolving, installment or mortgage debt.
I don't ask that borrowers know how to run these numbers or be able to qualify themselves, but a basic understanding of their own financial picture helps. The minimum they can do is have their info ready when they call. Hope that helps!
One full month’s worth of pay stubs
Last 2 years W-2?s
Last 2 years tax returns
Last two months bank statements for all accounts
Senior Loan Officer
American Mortgage Solutions, Inc.
800 Stone Creek Pkwy, Ste 7,
Louisville, KY 40223
phone: (502) 905-3708
Fax: (502) 327-9119
Company ID #1364 | MB73346
2. Have a general idea of what their credit is like and address anything that is negative
3. Determine what is most important to them in selecting a lender - are they strictly concerned with rate or do they value working with a true professional and experiencing a smooth closing with no surprises and are they willing to overlook 1/8% difference in rate to ensure this happens
Most recent 30 days' paystubs
Last two years' w-2's with 1040 forms and federal schedules
Most recent two months' bank statements (and any other liquid assets).
It is also recommended to avoid any new purchases during the time of the application and try to keep from moving money around in accounts.
Pretty simple stuff, actually.
Yeah, I know Michael, that last sentence does not necessarily answer the question of what they should do before they meet with me, but it is what is best for buyer. It is important for the selling agent and the LO to have a strong relationship based on past experience which fosters trust. Letâ€™s assume their agent sends them to me. The next step after the introduction is to gather ALL of the support documents needed to truly decision the loan. Most LOâ€™s donâ€™t bother asking for that in the PQ stage. That is why I estimate 30% of the â€œapprovedâ€ buyers do not actually qualify for the loan they have applied for. Send the docs to the LO, then pull credit, run DU using basic loan parameters and then meet and review clientâ€™s goals. Only after doing all of that should a path, loan product and price be determined.
It is like taking a pile of pickup sticks and laying them in a straight line.
NMLS # 6395
Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.