Real Estate
May 26, 2020
link to facebook link to twitter
More Stories
Second mortgage and refinance How the new PPP loan may adversely affect your mortgage How to navigate appraisal during coronavirus pandemic How to plan the optimal time to buy a rental property How to avoid getting a jumbo loan due to Coronavirus A factor that can drive your mortgage cost up How child support and alimony can affect your ability to get a mortgage What to look for when getting a mortgage on a manufactured home Why getting a 30-year fixed-rate mortgage is a smart financial move How to lower your cash to close when buying a home What you need to know about securing a VA mortgage Mortgage payment relates to purchase price What to expect mortgage rates to change in the upcoming months Loan limits for 2020 make getting mortgage easier Three reasons to buy home at end of year Can you get a mortgage with bad credit? Income and all outstanding loans are key factors to obtain a mortgage Your income is a lifeline to finance a home Don’t be focused on credit when getting a mortgage Why your mortgage goals may not happen Don’t make the mistake of 401(k) home buying Fannie & Freddie change home mortgage appraisals COVID-19-How a mortgage forbearence works How to get a mortgage without providing tax returns The new way to get a mortgage with 1 year income tax returns Four common home buying mistakes to avoid How to create wealth with your income and finances Should you buy a house with monthly mortgage insurance? 2019 conforming loan limits rise FHA loan limits for 2019 increase No more VA limits in Jan. 2020 Should you cash out to refinance What makes the most sense? Three pricey loan scenarios to watch A surefire way of making loan process a hassle Changing income and job status may affect mortgage chances Six common mortgage loan scenarios How to lower your debt to income when getting a mortgage How to make your financial profile less intricate Paying off debt to buy a house can be challenging Buy a home now or should I wait? Negotiating the purchase price of a house With the virus, should you be buying a home now? How to get a mortgage if you have been furloughed due to COVID-19 Three reasons you should not buy a home Types of loans based on credit score How the FHA 100-mile rules your ability to rent or buy Three quirky issues that will hurt your mortgage Seven common mortgage mistakes Why your mortgage payment keeps changing The credit score it takes to get a mortgage What to expect in today’s loan process? How 1031 tax-deferred exchanges work Six to avoid when purchasing a home How to use rental income to qualify for a mortgage Mortgage inquiry makes your credit score drop? Why waiting for mortgage rates to get better is a losing proposition Transfer property to family and be protected under Prop 13 FHA requirement might hurt buying chances Purchase price should not be most important factor Finances matter when buying a home Could the 30-year fixed mortgage get to 3 percent? Mortgage rate sounds too good to be true How the mortgage process gets ugly if you have a difficult picture Should you go FHA or conventional for purchasing your first home? Two mortgage process problems you will want to avoid Home value when refinancing What you need to know about the mortgage 4506-t document Don’t make mistakes when getting a mortgage refinance A non-traditional program for self-employed mortgage borrowers Should you buy and build or buy a single family home? How expensive your mortgage will be due to bad credit? Should you refinance with today’s mortgage rates? Be careful getting a mortgage if you have a bankruptcy Cash-out refinance or home equity Lender knows how to purchase business? Read the fine print Cash to payment formula when buying a home A bank statement program might help get a mortgage Pulling credit may not make sense Why the VA mortgage is the best home loan Can you use roommate income to get a mortgage? Best benefit for your first-time home buyer A loan program you may be eligible for based on your credit score Be wary about paying off this type of mortgage Common questions on financed mortgaged insurance loans Things that affect your first-time buyer mortgage options Self-employed income The #1 mistake consumers make when getting a mortgage… How much are closing costs when you purchase a house? Two mortgage loan programs get a better interest rate How much of your mortgage income should be going towards an auto loan? Five quirky refinance scenarios that work Working two jobs makes now easier to get a mortgage How mortgage lender credits work

The loan process and what not to do

By: Scott Sheldon
June 14, 2019

When you’re getting a mortgage the process can seem a little bit scary because it’s unfamiliar and most people don’t take out mortgages that often, so the unfamiliarity of the process can seem daunting, stressful and somewhat cryptic. Here is how the mortgage process works and most importantly what you should avoid doing when getting a loan…

In order to successfully procure mortgage financing, you must compile supporting financial documentation including but, not limited to, pay stubs, W-2s, bank statements, copies of insurance and complete an application with the lender of your choice. From here most banks will create an application, send you disclosures and move your file into processing where they do some additional dotting of the i’s and crossing of the t’s. Next the processor will push your file over to underwriting. Make no mistake the underwriter’s job is to deny your loan. Your loan will come out of underwriting either denied, suspended or approved with conditions. Very rarely do loans ever get denied, generally most loans get ‘approved with conditions.’

Approved with conditions means on a purchase you can generally release your loan contingency if the conditions are met which is based on the discretion of your mortgage professional. Approved with conditions means your closing will close provided you provide more supporting documentation. Here is what this might look like:

Provide a year-end pay stub with a breakdown of compensation.

Explain $4,200 cash deposit in savings account ending in 334.

Letter of explanation about why you’re buying this property in relationship to the other property that you presently own.

Provide last page of K1 that you supply the bank that you’re using for your mortgage with the above documentation your loan would be final approved clear to close and docs ordered to close escrow.

Let’s say for example you provide all these things requested and upon the review of those items more conditions are added. It happens, but not often. Please understand mortgage companies are not trying to deny your loan and they’re not trying to make life hard for you even though it might feel that way. The federal government says this is how you must do loans. It’s not an option to simply ignore a bank statement or withhold documentation because when that transpires the loan could cause what’s called a buy back in the secondary market and that lender could be on the hook for thousands and thousands of dollars. Mortgage underwriters can only ask for documents that are within mortgage loan guidelines. They can at times ask for documentation beyond that in quirky complex scenarios, but it is seldom. So, it’s critical to work with a loan officer that knows the guidelines better than the underwriter. Finding such an individual is a rare find indeed.

The number one thing you want to make sure that you don’t do when seeking a mortgage is go dark or non-responsive or be resistant to providing documents that the underwriter needs. You also want to avoid trying to supply another document in lieu of the document that the underwriter originally requested- 9 out of 10 times that does not work.

The simple answer is you must surrender. You must be willing to surrender and trust that the lender that you’ve hired to handle your home financing is going to perform for you even when it seems difficult and all odds are against you, have faith. Not all lenders and banks are created equal, but a willingness to stick it through to the end is worth it.

When the mortgage company asks for document the right answer is “ok.”

“I am too busy.”

“I will not provide that.”


“I have already provided this before.”

“I don’t understand and will not provide until I understand.”

All the above answers when a lender requests further documentation is the wrong approach especially if you are under a mortgage rate lock and timing is off the essence.

*Mortgage tip: Nearly all mortgages contain a time clock which is continually ticking, and you could be on the hook financially, by failing to provide the necessary documents the lender is requesting in the form increased fees for not closing escrow on time.

It’s usually quicker, faster and easier for you and in your best interests financially to just get the piece of documentation that the lender needs rather than being resistant or uncooperative when they’re only trying to do their job in helping you reach your financial goals.

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at