Why Do Lenders Need so Much Documentation

“Seriously, the lender is asking for a ton of stuff. Is this normal?

As a lender, I get this question all the time. Documentation is a by-product of the Mortgage Meltdown (although I hate that term), requiring all points to be verified, sourced and documented. I use the analogy today that; think of Underwriting like a Table. A table had four legs and if one leg is not attached then everything slides off the table. A Perfect Loan file is a table, and requires all legs to be securely attached. The four legs of documentation are credit, employment, income and money. You need all of these to qualify.

In the past you can have money and credit and buy a home. That was back in the day of stated income loans. They don’t exist today. You have to have all table legs attached and this requires documentation. For example, today we have to verify that the Tax Returns you gave us are the same ones you gave to the IRS. The money in your bank is all verified and sourced from every deposit. That your credit, addresses and inquiries are explained. This can seem like over kill. A good secondary article that I refer clients to is from Forbes almost a year ago, click here to read this article. That tells me that not many people are talking about this extra burden on buyers and the documentation requirements.

If anything my hope is that this article can help inform you of the process and that when we as lenders ask for documentation it is for a good reason. Does that mean that it takes a long time to close? The answer is NO. We close in two to three weeks all the time. The key is that we know and have been dealing with high documentation requirements for a few years. We know the documentations we need so when we ask for them and get it for us quickly, then a quick close is possible.

Also, the pre approval process is so important. By doing the pre approval process upfront, then we can educate you on the process and set the correct documentation needs up front to avoid last minute panicking and collecting of documents.
Matt Baker NMLS #190779
Colbalt Mortgage

Tags:

Exact matches only
Search in title
Search in content
Search in posts
Search in pages

Ready to talk? Call us today.

480-500-1738
  • #1 AZ Real Estate Team

  • Best REALTOR® In The Valley 2017

    - Nominee

    Finalists will be announced in October 2016

  • Top Ranked Real Estate Team

    - Phoenix Business Journal

    2015, 2016

  • Top 10 Buyer’s Agent

    - by Sales Volume

    Homes & Land Magazine 2015, 2016

  • Top 10 Producing Agent

    - by Sales Volume

    Homes & Land Magazine 2011, 2012, 2013, 2014, 2015

  • Top 1% of REALTORS®

    - in Maricopa County by Sales Volume

    Arizona Regional MLS 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016

  • Real Estate Agent of the Year

    - Finalist

    AZ Business Magazine – 2014

  • #1 Real Estate Team

    - in Arizona

    Ranking Arizona – 2014

  • #1 Agent by Sales Volume

    - in Arizona

    Realty One Group, North Scottsdale Office -2015, 2016 Realty One Group, Scottsdale Office - 2011, 2012, 2013, 2014 Realty One Group, National - April 2014

  • Gold Zone Award

    - in Arizona

    Realty One Group, National - 2014, 2015, 2016

  • Real Trends

    (National REALTOR® Rankings)

    Best Real Estate Agents in America 2014

See More
  • Date: 09/12/2018

    Source: Zillow

    First, what a lovely human being! I was very lucky to have found Janet before I left the east coast. We were in touch constantly - Read More

  • Date: 09/12/2018

    Source: Zillow

    Gina was on it from the minute I talked to her about what we were looking for. We were from out of town so she - Read More

  • Date: 09/12/2018

    Source: Zillow

    Alex is extremely knowledgeable, attentive, and a pleasure to work with! He is personable yet professional and puts your needs above his own. As an - Read More

  • Date: 09/07/2018

    Source: Zillow

    Gina was there for us from viewing different types of homes (condos, townhomes, and houses), writing our offer, and all the way through the final - Read More

  • Date: 09/05/2018

    Source: Zillow

    We had a nice experience working with Vicki and would highly recommend her. She provided excellent advice during our purchase of our home in Scottsdale. - Read More

See More