We’re thinking about buying a new house. The real estate agent we talk to has his own preferred lender, of course. It seems that this lender is asking for an excessive amount of financial documents. Or maybe I’m out of touch.
What this lender wants to see:
[ol][li]2008 and 2009 complete tax returns, fed only and all pages.[/li][li]2009 and 2010 w2’s.[/li][li]2 current paystubs.[/li][li]2 months bank statements, all pages and all accounts.[/li][li]Recent copy of your 401k Plan or IRA statements if applicable.[/li][li]Copy of your driver’s license.[/li][li]Copy of your current mortgage statement to reflect you housing payments.[/li][/ol]
I did a quick websearch, and this site: Loan Documents Needed to Apply For a Loan says you need to supply these documents:
[ol][li]Proof of Employment and Income (a recent check stub)[/li][li]Last year’s W-2 forms[/li][li]Last 2 years of income tax returns[/li][li]A copy of your most recent mortgage statement[/li][li]A recent bank statement[/li][li]A copy of the home purchase contract (if applicable)[/li][/ol]
I don’t see why the lender would need a copy of my 401K plan or IRA statements. And is it standard to ask for a copy of the driver’s license?
It doesn’t seem completely out of hand to me.
Even your smaller list is basically the same thing except only wanting one instead of the last two for a couple items.
We never supplied our 401K/IRA statements, even when going for the actual loan, because it was none of their business. I don’t think it’s necessary unless you are planning to fund your down payment out of the 401K/IRA or you need to show those assets for them to decide you’re solvent enough, in which case you can see how it would be their business. I think that is why they say “if applicable.”
I believe we had to supply some proof of identity, and driver’s license was easiest. Passport or something like that would also have been okay.
We did have to give 2 current pay stubs and 2 full bank statements (they made us go back and do it again because we were missing a page from one of them) and all that… I think it is because standards are tighter after the mortgage meltdown.
If you’re declaring your 401k or IRA as an asset to make your debt ratio lower they absolutely need to see it.
Doesn’t seem that unreasonable given the expected list you’ve provided but when we rewrote ours during the summer all we provided was a current income statement for my husband and a copy of my consulting contract for me. On the other hand we were rewriting our mortgage with the same lender so it was definitely simplified.
Doesn’t seem unreasonable to me. I recently re-financed and had to show most of that stuff (don’t have an IRA/401(k) to show). Not only did I have to bring it to the branch for the loan guy to make copies of, I also had to send the same stuff to corporate HQ (postage paid!)
One thing that did piss me off is that the loan guy kept telling me that even though my business is an LLC and I am not a sole proprietor or anything, they will most likely want to see copies of the business tax returns for the last 2 years. At first I said “no prob” because I happen to be the bookkeeper and have that stuff on hand, but then I said “wait, what? My business’s tax returns have nothing to do with my house.” I draw a real paycheck and pay real taxes and keep the business’s money in an account under the business’s name.
I never heard about needing those documents again after I told the loan office “no” twice. Just pisses me off that people assume that since I work from home, I have some sort of fake job and fake company, and all my clients write checks in my name.
Anyway, seems to me that lenders are being suuuuuper careful about who they lend to nowadays, so asking for a pile of proof doesn’t seem that odd to me.
I was going to say that they shouldn’t ask for the retirement account documentation since you can’t tap that to cover the mortgage (unless you’re retired)… then I realized that’s the point: they want to know that there’s a fair chance you’ll still be able to make payments when you do retire.
We recently refinanced and had relatively little paperwork. It was helped by the fact that we went through our credit union, and they (obviously) had access to all our accounts there. IIRC, we had to provide:
recent pay stubs for both of us
A signed form giving them authorization to request our tax returns from the government
Copies of investment plan statements showing we had sufficient stock to come up with the cash for closing costs (as we had stated that’s where we were getting the costs from, we didn’t want to roll them into the loan).
Probably copies of our driver’s license (we definitely had to do that at closing).
We definitely did NOT have to provide W2s (presumably that would be taken care of by the tax returns).
FYI - you do NOT have to use the lender the realtor recommended - in fact I thought they were really NOT supposed to do that as it could be a conflict of interest (e.g. kickbacks). Definitely check around with several lenders before you make any commitment.
ETA: I looked at the email chain and they did in fact ask for last year’s W2 (well, this was in November so they wanted our 2009 W2).
They also wanted a copy of the “declaration page” from our homeowner’s insurance (if you’re buying a new house, they’ll want something like that proving you’ve made an initial payment on a policy, but you’ll need that at closing vs. beforehand).
My last original mortgage was over 20 years ago, I paid 20% down and have and (had) a great credit score. Seem to remember showing most of those at the time so those documents do not seem unreasonable to me - maybe the tax forms, a little. I would actually be concerned about lending you money if you couldn’t produce those documents.
That might explain why they would want to see the 401K / IRA statements. I’m going to send everything they ask for, except the 401K / IRA statements, and see if they complain.
I can e-mail all of those, but when I ask them about safe ways of sending e-mail (like PGP encrypted e-mail) they all say “I’ve never heard of that.” You would think they would be encouraging their clients to use safe methods of transmitting the documents.
We are going to check out a couple of our credit unions also, and go with whoever has the best rate.
When I got my VA Loan, which supposedly has easier entry requirements for veterans, I had to provide pretty much all that, plus my VA certificate of eligibility, and my discharge papers. The 401K requirement was required because they need to assess net worth against your current debt load - that’s how it was explained to me.
They will complain. Actually the underwriter will complain. Typically this is stuff the underwriter is asking for, so if you don’t supply it, it will only slow down your loan approval. Something you should consider if you choose to NOT provide it. I had to show them all of this AND my divorce papers indicating what my alimony payments were. That one seemed odd as I am paying that out and had declared it–if I didn’t have to pay alimony I would have more cash. But I think they wanted proof of the amount I was paying, and not just accepting what I said my alimony was. Which makes some sense but that one pissed me off, but I still supplied what they asked for. But I also recall having to show my 401k and other retirement money. I purchased a home about 6 months ago and I think the underwriters are just being extra over the top these days.
We have plenty of time, we haven’t even found the house we want to buy yet. Right now we’re trying to find out what interest rate we can get and how much we would qualify for if/when we do decide on a house.
If it doesn’t affect your debt ratio, I don’t see why they’d complain. I think our lender assumed we didn’t have one. Which was fine with us, as we had a perfectly fine profile without it.
We had to show every piece of paper relating to houses, banking, taxes, and expenses for the past 5 years.
However, we applied for the mortgage for our very first house right as the shit was hitting the fan from the housing bubble.
The whole process was degrading, insulting, and really overly intimate - the stupid underwriter actually called me at work to interrogate me about a check from my grandmother which had been a Christmas present.
She demanded that I travel to my grandmother’s house, find a notary, and get a document personally written and notarized that the money was a present and not a payment for something. I was seeing red at that point, and lost my cool a little with her on the phone about some people having day jobs and relatives in other cities where they couldn’t drop everything to get some damn piece of paper for nosy bitches. She apologised and hesitantly suggested that I have my grandmother mail something in when she gets the chance.
However, despite my hissy fit, we did get approved for a mortgage in record time, for a really good rate, so that sweetens it up a bit.
I am NOT looking forward to ever going through that again.
So yes, be prepared to give them anything and everything they ask for, and know that they might very well ask for it.
Why? How much did granny give you? I can’t see how this could possibly be material unless she is giving you 100k or something, and then, how does it matter where the money is coming from other than for taxes? Was the fact that this money was coming to you tax-free somehow material to your application, in that if you had had to pay taxes on the money, you would be in a materially worse position to pay back the loan?
And to take a different perspective, Lasciel, if you tell your dear sweet old grandmother that I also am buying a house, and remind her that I didn’t get a Christmas present from her this year, maybe she can send me a large check too.
For my last mortgage I didn’t have to provide any documents to my bank, other than the completed application form. My salary is directly deposited, so the bank already had details of my income, employer etc.
We got our mortgage in the spring of 2003, right at the height of the foolishness, and god as my witness, I don’t remember providing ANYTHING. I did go through the teacher credit union, and they presumably could see that I was employed and what I made, but I think we just wrote down my husband’s salary and they took our word for it. Now, it was a fairly small, very boring mortgage (115K in the end, but I think we were pre-approved for 150K or so, fixed rate), it was well within our means, our credit was squeaky clean, and we had 10% down, but I still can’t believe they didn’t ask for anything. But I really don’t think they did. If they asked for a driver’s license, I showed them an out of state one.
Not only is this common nowadays, be prepared to keep having to provide bank statements and pay stubs as you get closer to closing. This is the 3rd house I’ve mortgaged since the mid-90’s, and I’ve never had to jump through hoops like I did this time. (Closed last July) At the time, I read somewhere that only 38% of the people applying for mortgages were getting approved.
I had to prove EVERYTHING. They went through my bank statements and wanted explanations for a couple of different deposits. (A couple for $100 and one for around $400.)
I moved some money from my savings to my checking for down payment and had to show the savings bank statement, copies of the cleared check I wrote to myself, and show on my checking statement when it deposited.
It was far more intrusive than any other time I’ve applied for a loan. I just kept smiling and providing the info because I really, really love this house!
It was one grand, which is what she gives as a Christmas present to each grandchild who is currently enrolled in higher education. (It’s not fun money, but I wasn’t under the impression that it was amazingly high-rolling either.) And furthermore, while my income isn’t amazingly high, I can say that 1000 isn’t a notably high sum in comparison - which nosy underwriter person would have known, as by that time she had all of my monthly bank statements for the past few years.
I have no earthly idea why she felt it so important to know the particulars of that one gift. Maybe generous grandparents are passe?
It was a weird experience overall - I like being relatively private about money and suchlike, and it was just bizarre to have perfect strangers commenting and questioning all of our funding and our money situation, which, as far as I know, are relatively normal.