When you start your loan application, you may be overwhelmed by how much documentation is required during the process.
And you may start feeling worried about whether or not you can get it all right and qualify for the loan you want.
So in today’s article, I’m going to break down the loan application process and examples so you can start preparing and avoid the stress and overwhelm. One of the first steps when getting your loan approved is having the processor review your documentation.
After that, then they will submit it to the underwriter to ultimately review your file and make sure that we have everything that we need in order to approve your loan. Something that’s part of the process and is entirely normal, is a conditional approval. That means that your approval is conditional upon receiving outstanding documentation. Most of the time, that’s going to include documents like title work from the attorney, the appraisal, maybe an additional pay stub - things like that.
Sometimes though, what happens is the documentation that you provided actually creates other questions that need to be answered. For example, deposits that are outside of payroll. These are cash deposits or maybe a gift you received. According to standard lending guidelines, we require documentation about where those funds are coming from. If it's a cash donation, we may not be able to use it. If it's a gift donation then we may be able to use it. All of it will require getting more information on the donor and the source of those funds.
A second example is seeing recent inquiries on your credit report. We’ll ask about the results of those inquiries. If there is a new loan or new debt that you have, we're going to need documentation in order to document what that payment is and who you owe so that we can update your loan applications.
The third example of things that may come up when we're underwriting your file relates to income. For example, if you told us that you work a 40 hour week but your pay stubs indicate you’ve been averaging between 35 and 38 hours, we're going to need documentation from your employer to show what your previous history has been and what we can expect going forward.
I hope that helps you demystify the loan application process so you can be better prepared for what may come up. All of these examples are completely normal and we can work with you to make sure everything in your file is ready to go.
If you have any additional questions about starting your home buying process, you can contact me by emailing (rebecca.richardson@wyndhamcapital.com) or finding me on Instagram (@the.mortgage.mentor).