The Needs List for a Borrower

Here is the letter I send to clients to get their file started, it tells them what we will need, covers the things to avoid doing, and is designed to eliminate issues to ensure a smooth closing:

Thank you for the opportunity to be of assistance with your financing. If at anytime I can answer any questions please let me know.

Here is a list of what we will need from you, let me know if you have any questions on anything.

Copies are sufficient, originals are not needed for your file.

Please note that it is better to send me these items as they become available rather than waiting to have everything.

- Past two pay stubs assuming bi-weekly payment, otherwise for weekly payroll four pay stubs

- Most recent quarterly retirement statement (all pages, even if page 4 of 4 is blank, we need it to complete the document)

- Past two bank statements (all pages, even if page 4 of 4 is blank, we need it to complete the document) IF YOU ARE ON AN ACCOUNT WITH ANOTHER INDIVIDUAL WHO WILL NOT BE ON THE LOAN THEY WILL NEED TO WRITE A LETTER STATING YOU HAVE FULL ACCESS TO THE MONEY IN THE ACCOUNT

- 2011 and 2012 years taxes with all schedules (if you show business deductions or loss on your taxes please let me know immediately)

- 2011 and 2012 W2's and/or 1099's

- Your work address and a phone number to the business

- Digital copy of driver's license, either a scanned copy or take a digital picture and forward, it is important that we have a clear copy

- Copy of social security card (if you do not have it I can use your W2 instead)

- Name and telephone number for verification of employment, or if your company uses the Work Number we will need a company code that you can request from your HR department

- Name and telephone number for your insurance carrier you use for homeowner's insurance, the #1 reason for delayed closings is last minute insurance quotes, get a quote during your inspection period and have your insurance agent email me at Patrick.Ritchie@FreedomMortgage.com for the mortgagee clause and loan number.

The following is only needed if it applies to your situation, I list this so we don't miss anything, if it doesn't apply please ignore:

- If you currently rent we need the name and telephone number for your landlord to verify rent was paid on-time

- For self-employed borrowers we need the name and telephone number for your accountant. Please note that your accountant will need to verify your business twice, once at the beginning of the transaction and once within 10 days of closing, it is a good idea to make sure your accountant will not be on a boat in Tahiti within 10 days of your closing.

- If you have ever been divorced we will need a copy of your divorce decree

- If you are ordered to pay or receive child support we will need a copy of the support order

- If you have filed for bankruptcy we will need your bankruptcy discharge and all schedules, if you do not have it I can access it through the federal court house with your bankruptcy filing number

- If you have a mortgage that has been modified please provide your modification agreement

- If you had a foreclosure we will need your 1099-C or 1099-A showing the property address and how your name appeared on the mortgage

- If you had a short sale we will need a copy of the HUD-1 Settlement statement to show the date of closing on the short sale

- If you have had a bankruptcy, foreclosure, or short sale we will need a signed explanation letter covering the extenuating circumstances surrounding the event (job loss, medical, divorce, family issues, etc.), why it happened and why it isn't likely to happen again.

- If you have sold a property in the past 12 months I will need a copy of the HUD-1 Settlement statement

- If you have rental properties we will need current signed copies of all leases, mortgage statements, and HOA payment statement/coupon

- If you have any other real estate that is not rented out we will need mortgage statements, and HOA payment statement/coupon (if you own it free and clear or do not escrow your taxes and insurance please provide a tax bill and copy of your homeowner's insurance policy)

- If you are a Veteran using VA we will need a copy of your DD-214

- Number of dependents and their ages living in your household

- Let me know if you have applied for any new credit in the past 90 days where the new account may not yet be reporting on your credit report

The 'do not do' list will make our transaction go smoother:

• Non-payroll deposits must be seasoned in your bank account for 2 months, otherwise it will have to be documented to show where it came from (check stub, etc.). Do not make any non-payroll deposits into the bank account(s) you are using for this transaction, unless it can be documented with a copy of a check, statement, gift letter, settlement statement, bill of sale, etc., please do not deposit cash. Cash is bad because it cannot be documented other than with a bill of sale, if you need to deposit cash please call me ASAP so we can figure out the best approach, this will eliminate problems later.
• Do not apply for any credit other than the mortgage application when you want to purchase a home.
• Do not co-sign with anyone on a new credit transaction.
• Do not apply for any 6 months same as cash financing for furniture or appliances until after closing.
• Do not quit your job or switch employers during the home buying process, if this is a possibility let me know ASAP (EMPLOYMENT WILL BE VERIFIED AT THE BEGINNING OF THE TRANSACTION AND AGAIN WITHIN 10 DAYS OF CLOSING).
• If you are buying a condo let me know ASAP because there are specific  requirements for condos and not all will qualifying for financing, this does not apply to townhomes or patio homes, only condos.
• If you are planning on getting married or divorced during the transaction let me know ASAP
• If you intend on asking for repairs in your contract have your agent contact me on the verbiage to avoid issues with the use of "credit or allowance" in the contract.

The appraisal need to be paid with a credit card once you have a contract to purchase a home, you will be called to get your credit card number to pay for the appraisal.

You can drop these items off at my office, or scan and email them to me. If you would like for me to copy these for you at my office let me know. I do need to get these documents as quickly as possible in order to move your file forward, please let me know if you have any questions or need assistance with these documents.

Thank you for the opportunity to be of assistance with your mortgage. Feel free to call or email me with any questions.

 

Patrick Ritchie
Mortgage Finance Instructor

Ritchie School of Real Estate Finance

480-203-4641 Cell
Patrick@PatrickRitchie.com

NMLS# 276438 AZ#0913109
Click Here to go to Patrick's Mortgage Website

 

How is the Short Sale Reporting on the Credit Report?

How a short sale reports on a credit report is important, it can make the difference between an approved mortgage or a denied mortgage. On a conventional loan, someone who had a short sale 2 years ago or more, and had an extenuating circumstance (job loss/reduction, medical, divorce, etc.) is eligible for a new conventional mortgage. However, the way the short sale reports can make a difference with the approval.

 

Ideally a short sale will report as "settled for less than amount due" or some deviation of that, and show a $0 balance and $0 past due. In some cases the short sale was never updated and shows on the credit report as being a foreclosure that is still past due. This makes a difference.

 

I had a client who had a short sale just over two years ago, it reported on the credit report as a settled account, and  the client has a good explanation for the reason the short sale occurred. I ran the file through automated underwriting and received an approval. A different client, same facts, except the short sale reported as a foreclosure with no reference to the account being settled, this loan was not approved by automated underwriting.

 

Same scenario for both borrowers, but the way the credit report is reporting can make a huge difference, make sure the credit report is reviewed for accuracy because when someone is ready to buy they may not be in the best position due to how their credit report is reporting.

 

If someone isn't sure about how to address their short sale have them contact me to get them in position to get a mortgage.

Have a mortgage or credit question you would like for me to cover on this blog? Shoot me an email so I can address it. If you want to apply for a mortgage in Arizona give me a call at 480-203-4641, the application process is easy, and it only takes 10 minutes for me to get the information to get you started on your way to home ownership.

Patrick Ritchie
Mortgage Finance Instructor

Ritchie School of Real Estate Finance

480-203-4641 Cell
Patrick@PatrickRitchie.com

NMLS# 276438 AZ#0913109
Click Here to go to Patrick's Mortgage Website