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Lender Documents: Why So Many?

As a lender, it seems like the number of  documents I have to ask for are always increasing. There are so many! Of course there are the basics: pay stubs, W-2’s, and bank statements. However there are always those extra documents!

I have had to ask for doctor’s notes, lawyer’s notes, even a teacher’s note! It seems like after I say “Well that’s it for now” I never fail to receive an update from the bank asking for more documentation!

As a lender, my documents (or “ducks” as I call them) have to be lined up in a row…perfectly. If not, you lose your home and I lose my job. Which means it’s back to my college days of eating ramen noodles for dinner, and NOT by choice.

SO, what should you do if your lender keeps asking for the most minuscule documents? SUPPLY THEM!

In most cases your loan officer is trying to meet the conditions of the bank, not just drive you crazy with phone calls. If anything, you should be worried if your lender doesn’t ask you for certain documents (See “Why It’s Important to Be Prepared“) .

For example, I had a borrower who was looking to refinance his home. He was trying to take out $125,000 worth of equity. His home is worth $720,000 . A previous Lender that thinks money grows on Trees, said they could help him no problem.

Three months later he called me asking for a second opinion.I reviewed his credit, which was perfect (See “Bad Credit…Is It Really That Bad?”). I reviewed he and his wife’s income, very healthy. What could possibly be wrong? He’s the ideal client, a lender’s dream!

Well long story short, his previous lender asked for all the basic documents, but neglected to request some key documents related to his current mortgage.

What turned out to be a three month nightmare with the previous lender, was really a 3 week open and shut loan refinance for me.

Now, is every situation different? Of course, because every person’s financial situation is different. This is why choosing your lender is so important, you have to make sure that they are going to be competent to handle any hiccups in the loan process. Mind you, these hiccups could cost you thousands of dollars.

Bottom Line

Remember that you are asking me to loan you hundreds of thousands of dollars. The documents you submit are your earnest attempt to show that you are trustworthy with this loan. When it comes time to render a decision, I imagine you want the bank to have no doubt as to your abilities to pay your mortgage.

Just know that ducks in a row are happy ducks.

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