Does My Arizona Lender Need My DNA?

Phoenix Arizona Mortgage Approval

The running joke and most commonly heard wisecrack in the mortgage world is “do you want my DNA” or “how about I send you my first born.”  If I put myself in  the shoes of a client who simply wants to buy a new home or refinance their existing mortgage I can understand why today’s mortgage approval process can be perceived as overkill.  To take it a step further, clients who compare their pre 2009 (or before) mortgage experience to that which a mortgage applicant goes through today are in for a big surprise. To put it mildly, things have changed.

Long gone are the days where he who fogs a mirror is approved for a brand new shiny over-sized mortgage with virtually no questions asked (and those days should be long gone – a part time janitor “stating” they make a six figure income is not /should not be acceptable).  In post 2009 mortgage-land, each client/mortgage applicant must document their ability to repay their home loan.   As with many corrections, the mortgage world has certainly “over corrected” a bit.  However, all the changes we have seen have been put in place to try and prevent going through what we are just starting to come out of in the Arizona Real Estate market.  Think of the powers that be who are behind these over corrected mortgage regulations like first time parents.  They, like first time parents haven’t been through this before and they are trying to make sure this market matures and grows up to be responsible.  From my own personal experience and now being the father of 2 I know a little about that feeling. For example, if a green bean falls on to the clean kitchen table (maybe even the not so clean table) it does not need to be quarantined into a hazmat like container instantly protecting my son from some infectious counter top disease.  No, he will be just fine if he picks it up and swallows it down on the spot.  However, as a first time parent I would overreact and scoop that bean up before he know what happened – aka an over correction. In the end, over corrections included – the process of getting approved for a mortgage today is not nearly as difficult as some portray it to be.

What Do I Provide for an Arizona Home Loan Pre-Approval?

Each and every mortgage scenario is different whether it is an FHA, VA, Conventional, USDA or Jumbo home loan.  An employed borrower, retired borrower and self employed borrower will all have to provide very different documents based on the fact that their income structures vary.  Lets run through a list of standard documents that Phoenix Arizona Mortgage Lenders need to approve a home loan:

1. Drivers license
2. Most recent 2 years Federal Tax Returns (all pages, all schedules) – self employed borrowers will need to provide their K1’s, 1120’s, 1065 etc…. depending on how they file their income
3. Most recent 2 years w2’s and 1099’s (whichever applies)
4. Most recent 3 pay-stubs (if paid weekly the borrower needs to provide 5 pay-stubs)
5. Most recent 2 months asset account statements
6. If retirement accounts are needed for approval each borrower must provide the “terms and conditions” for their retirement account showing how they may access the funds in the retirement accounts
7. Mortgage payment statements for each of the properties that the borrower currently owns
8. For all properties that the borrower owns free and clear and/or for all properties that are financed that do not have taxes and insurance included in their mortgage payment the borrower must provide a property tax bill AND a homeowners insurance bill showing what taxes and insurance costs are
9. HOA payment coupon if any properties the borrower owns are in an HOA

This list could go on and on to include job transfer letters (when applicable), non-perm res/per res documentation (when applicable), proof of liquidation of assets needed for down payment (when applicable), child support/alimony documentation (when applicable), proof that a bill has been paid for 12 months by someone else and that the “someone else” is on the note for the loan being paid if the loan payment is not to be included in the borrowers application (when applicable), documentation to show a student loan is deferred for 12 months from close of escrow (when applicable), proof that a property that shows up on a “fraud guard report that all lenders pulls is or is not the borrowers and much much more.

One Bad Apple…

I do not share this to frighten or overwhelm those looking for mortgage approval.  In fact, quite the opposite.  This is a reality check.  If you are going to apply for a home loan today in Arizona (or any other state) this is what you will be dealing with.  Do NOT disillusion yourself into thinking that you will be subject to a special slim fast version of rules, regulations and requirements.  Ever heard the saying “one bad apple spoils the bunch?  Those that abused the system a in the early 2000’s have “influenced” today’s version of the mortgage market.  While you might have the best credit, the most solid income stream and plenty of cash for a down payment you will be scrutinized just the same as the next borrower.  Gray areas do not exist right now in the mortgage world.

What does this mean for you?  In short, you need to make sure you are working with an Arizona Mortgage Lender that knows mortgage guidelines inside and out and upside down for two reasons.  The first and most simple is for your own sanity.  It is essential that your mortgage partner helps to communicate what is needed for approval in a complete, clear and understandable way.  After all, to the average client  that applies for a mortgage once every 5 years, the process can seem very overwhelming if an experienced Phoenix area loan officer is not helping them understand why what is needed is needed.   The second and equally important reason is that a failure to gather all of the proper/required documentation is the absolute downfall of any mortgage loan scenario.   All potential hurdles must be examined before a pre-approval is granted and before a client spends non-refundable funds on home inspections and appraisals.  Sounds complicated right?  It is not.  It is just a matter of being thorough.  The pre-approval process can take as little as 24 hours (or less).

90% or more (by my estimate) of all last minute surprises and Arizona mortgage horror stories stem from a failure to perform the proper due diligence on the front end of the pre-approval process.  This kind of negligence can prove very costly to anyone applying for a home loan.  Make sure that your Phoenix mortgage experience is ideal by selecting a loan officer that will take the steps necessary to help you and your family.

Please call or email me if I can assist you with your mortgage pre-approval.  You can also APPLY NOW.

By Jeremy House

 

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  1. […] For example, often a borrower receives SSI/Disability due to a disability.  In such a case, lenders must document the disability will persist for at least 3 […]

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