Forms needed for pre-approval

Asked by May, Daly City, CA Mon Feb 9, 2009

I'm in process of getting pre-approved. My broker asked me to submit tax return for last 2 years. Also, she asked me to sign and turn in Uniform Residential Application, Good Faith Estimate,Truth in Lending Disclosure Statement prepared by the broker and Request Transcript of Tax Return. My question is do I have to sign and turn in all those forms for pre-approval ? (Property address is not specified in the forms )

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Luke Allison, , Asheville, NC
Mon Feb 9, 2009
No, you do not have to turn in any of those forms for a pre-approval. Pre-approvals are gererated through an electronic underwriting system which factors such items as your credit, income, assets, etc. to determine if a loan will be underwritten. Some lenders like to have what we call "a full package" which contains items like your signed loan docs, income docs, asset docs, contract, etc. in order for them to give a full approval of a loan.

However, I understand what you are asking and you feel like you are jumping through a lot of hurdles for what should be a quick process. As long as your credit qualifies, I can have you a pre-approval without you lifting a pen.

If you need help or have any questions, please feel free to call or email me.

Luke Allison
Flagstar Bank

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Tony Grech, Mortgage Broker Or Lender, Southfield, MI
Mon Feb 9, 2009
Hi May,
The benefit to you of working with a mortgage broker is that they can shop among the lenders they sell loans to so they can get the best terms for you. The downside is that most lenders who deal with brokers these days are requiring a COMPLETE FILE before providing a loan decision. This means that without verifying income and assets and getting a completed application from you, they can't reliably approve you for a loan. My guess is that since they are requesting tax returns you may be self employed or be paid on commission. Often there are discrepancies between what a self employed or commissioned person say they make and what their tax returns say they make, if you know what I mean. At the end of the day, a lender has to go by what you pay taxes on, so if you make use of a lot of write offs or deductions this could hurt your qualifying chances. The lender is probably just trying to look out for your best interests and to provide a FIRM approval.

It's a tough time in the mortgage industry right now and borrower qualifications are being scrutinized and put under the microscope more than ever. So if you've done a mortgage before, throw out everything you THINK you know about the process because things have changed a lot due to rampant abuses in lending.

If you don't like the idea of providing any documentation, then you can go elsewhere...just realize that a pre-approval that's done without documentation to support it is pretty much worthless anyway. My advice is to work with a local, reputable lender and to provide them with anything they need to ensure a smooth purchase and closing. Otherwise you are wasting everyone's time including your own.

Best of luck!
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