Mortgage Application Tips – Part II

Let’s finish up with employment and income tips picking-up where we last off last time.  For those borrowers that work for a company which they do not own make sure that you give your loan originator the name of the person or department that can verify both your employment history and income. Many companies today use third parties like The Work Number to verify these items. If that is the case with your employer make sure you give your loan originator that took your mortgage application or their mortgage processor your “salary-key” provided to you by the third party vendor. Not having that number and giving it to your mortgage lender can delay your mortgage approval.

For those borrowers that must submit tax returns for mortgage approval, make sure that you have signed/dated the returns. even if you file electronically underwriting guidelines require them to be signed a dated. In addition, provide all pages and schedules in order to make it a complete return for the mortgage underwriter to review. If you are a business owner in some instances you maybe required to provide your business tax returns as well.  If you own more than 25% of a business you are considered self-employed for mortgage underwriting purposes.

For those borrowers working for someone they will need their most recent two pay-stubs showing Year to Date Earnings along with their most recent two year’s W-2s. As mentioned earlier the self-employed borrowers will need to provide their most recent two year’s tax returns when applying for a mortgage.

Another important item that needs to be accurate on the mortgage application and well documented are your total liquid assets. Income let’s the mortgage lender know you can make the mortgage payment and service your debt, while assets are the thing that will insure you can continueto make the payment should you hit a rough period. Lenders especially in today’s economy want to see that you have “financial staying power” in case you were to become unemployed. They want to make sure you have enough in “reserves” to continue to make your mortgage payment until you find a new job.

On aspect that has changed due to volatility in the stock market is that instead of getting 70% credit for the value of your retirement accounts, lenders now only give you 60% credit for them. The lenders know that you will pay about 30% in taxes and penalties for early withdrawal and the other 10% is due to the overall market sell-off over the last few years.

You will need to provide the mortgage lender that most recent two month’s statements for each financial account. Be sure to include all pages even if the page is blank. If you use internet print-outs make sure that it has both your name and account number on it. Otherwise the mortgage company cannot accept it.

For any large deposits on any account you will need to provide a “paper-trail” that documents where it came from. Mortgage lenders have this policy to make sure none of the assets are borrowed. Obviously auto-deposits from payroll are self-explanatory.

We’ve finished up the income and assets part of this series and will pick-up with the other parts of the mortgage application that will insure a mortgage loan approval.

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