Documents Required For Mortgage Processing And Underwriting

This Article Is About Documents Required For Mortgage Processing And Underwriting

All documents required for mortgage processing and underwriting needs to be completed in order to close a home loan on time.

• This includes blank pages
• There are things mortgage borrowers need to know when applying for a mortgage
• The initial phase of the mortgage process is the most important
• A file should not be submitted to processing and/or underwriting unless the file is fully complete
• Incomplete documents and missing pages are the number one reason for stress during the mortgage process
• A well-experienced processor will not submit the file to underwriting unless the file is fully complete
• It is better to wait a few days until borrowers submit all required paperwork than submit an incomplete file

Submitting an incomplete mortgage file is the number one reason for delays in mortgage process.

Importance Of Documents Required For Mortgage Processing And Underwriting

As mentioned, in order for the mortgage process to run smooth and get to the closing table on time is to have complete documents required for mortgage.

• Every borrower’s file is unique and different
• Not everyone will need the exact documents
• However, there are basic documents required for mortgage processing on all files
• Depending on the individual borrower, additional documents required for mortgage processing will be required
• Borrowers with bankruptcy, foreclosure, short sale, judgments, divorce will need this paperwork

ID Verification Documents Required For Mortgage

All lenders will need the identification of borrowers. Lenders can only accept certain documents to validate the ID Verification Requirements. Here are the acceptable forms of ID Verification:

• Valid Driver’s License issued by a state that is not expired
• Military Identification
• Valid U.S. Passport
• Social Security Card – If you are missing your social security card, your loan officer will be able to send you an SSA-89 form
• This form verifies the name and social security number with the Social Security Administration’s records
• Green Card issued by U.S. INS
• ITIN
• VISA

Property Information Documents On Purchase And Refinance

Refinance Transactions

• Recent Mortgage Statement
• Mortgage Note and closing documents
• Copy of insurance contact information, declaration page, and phone number of insurance agent/company
• Recent Utility Bill under borrowers name with both the service and mailing address

Purchase Transactions

• Copy of the signed real estate sales contract including all riders, buyers and sellers agents, and title company information
• Copy of earnest money check and verification of the deposit placed on the home

Income

• Copies of recent pay stubs for the most recent 30-day period
• Copies of w-2 forms for the past two years from employer
• Names and address for all employers in the last two years
• Most recent two years federal income tax returns if applicable

Self Employed Or 1099 Wage Earners

Borrowers Who Are Self Employed Borrowers and/or Commission/Rental Income/Royalty Wage Earners:

• Complete income  tax returns for the last two years
• Need to complete tax returns that are signed
• Provide and include all attached schedules and statements
• Year to date profit and loss statement and balance sheet
• K-1’s for all partnerships
• S-Corporations for the last two years and most K-1’s are not attached to 1040s
• Completed and signed Federal Partnership (1065)
• Or Corporate Income Tax Returns (1120) including all schedules, statements, and addenda for the prior two years
• This is required only if your ownership position is 25% or greater

Child Support And/Or Alimony Wage Earners

Child Support and/or Alimony Income can be used as qualified income as long as the continuation of income will be likely for the next three years:

• Provide divorce decree/court order
• Divorce decree needs to state the award amount
• Need to provide documentation of receiving child support and/or alimony for the past 12 months

Social Security And Pension Income

Social Security and/or Pension Income can be used as qualified income. NON-Taxable income can be grossed up 15% to 25% depending on the loan program:

• Provide social security awards letter and/or pension awards letter

Documents Required For Mortgage On Asset Documentation For Down Payment And Closing Costs

• If the sale of an existing home is applicable, need to provide closing docs
• If the property is listed but not sold, need to provide listing agreement
• Provide settlement statement if sold
• Savings, checking or money market funds and/or all asset accounts with funds that will be used for closing needs to be provided
• 60 days of bank statements and/or printouts
• Stocks and bonds statements if borrowers are going to need asset information of qualified funds
• Gift funds by donor need to have donor sign gift letter and 30 days of donor’s bank statements
• A gift letter will be provided by lenders

Debt To Income Ratio Calculations

Borrowers liabilities will be required by mortgage underwriters when they need to calculate DTI:

• Student loans, child support, alimony debt information needs to be provided
• All minimum monthly debt reporting on the credit report will be counted
• All public records such as judgments and tax-liens not reporting on the credit report will be discovered by lenders when they due to a national third party public records search
• Disclose any judgments and/or public records not reporting on the credit report

Gustan Cho Associates is one of a few national mortgage lenders with no overlays on government and conventional loans. Dale Elenteny, the author of this blog is a 20 plus year mortgage industry veteran and an expert in traditional and non-QM loans. Please reach out to us at 630-479-2719 or text us for faster response. Or email us at dale@loancabin.com.