Paper work in the mortgage process
love it or hate….
It amazes me on the amount of documents needed to buy or refinance a home. In making light of the frustration I often ask to have a hair follicle placed in a Ziploc bag and sent to me; the days of walking into a bank and getting a mortgage because your credit score is 700 is long over. It will require everything except a blood sample. The logic is that you are borrower 100’s of thousands of dollars based on information written on paper.
You must have an open mind when going through a refinance transaction. A good loan officer will ask a lot of questions so they can better inform you of what’s required; if you’re self-employed or retired your life just got a little more difficult. The more sources of income one has, the more documentation will be needed. Many loan officers fail to ask enough questions and the lack of experience can make for a long dragged out frustrating mortgage process.
The twists and turns of this industry created a monster called underwriters. I compare underwriters to IRS auditors. To an underwriter everything is black and white so whatever is on paper is what they see. If you are required to supply bank statements to show source of deposit, retirement income or money brought to closing, be prepared to have every deposit scrutinized. Most underwriters will look at deposits of $300 or more in your bank account. They will ask when each deposit came and ask you to document where the deposit(s) came from. At this point it’s very personal and offensive to many borrowers that someone is poking their nose where they feel it shouldn’t be.
Given the melt down of the housing industry and tighter credit policies, this is a practice to ensure new credit wasn’t taken out and not disclosed during the process. The underwriter needs to verify the source of each deposit and verify it’s not a loan.
There isn’t a stone that doesn’t get unturned when you’re buying or refinancing a home in the mortgage process. The underwriters are to protect banks from making bad investments, so they will analyze everything from your pay stub to your favorite color.
When choosing a loan officer it’s important that you trust that person with your most valuable assets. Whether you are refinancing for the 3rd time or buying your first home, you will develop a relationship with your loan officer; only your loan officer will make the mortgage process an enjoyable one. So do your due diligence, ask a lot of questions, and go with your gut.