Whether you’re shopping for your first home loan or are an experienced investor, your loan profile is more important than ever. A well-organized loan file is a valuable asset you should begin creating now.
If you don’t create a file, you’ll think of me next time you apply for a loan!
After the housing crisis of about 2008 to 2012, FannieMae and FreddieMac came down hard on mortgage underwriters who approved “bad loans.” The days of loan officers giving a friendly wink and a nod to get a loan approved are gone. Originating lenders of bad debt can be forced to buy back their ill-gotten notes. This could get costly and has been deadly for small lending institutions that drowned in an ocean of uncollectable debt.
Get used to the idea: You must put your entire financial life on the table to get a mortgage loan. The more prepared you are when you start the approval process, the faster you will be buying your Utah dream home.
Raise your right hand and say it with me: “I do solemnly swear to create a stellar loan file that will knock my lenders’ socks off.”
Ready? Let’s get started.
Store files securely
Scan your important financial documents onto your hard drive. Password-protect these electronic records. Burn them to a thumb drive and store an extra copy in a safe deposit box. Update your records regularly. Maintain original files safe at home or in your private office. Some Utah mortgage lenders require original copies of certain documents. This is a living file, it will change from time to time. Technology advances fast, store your electronic files in a format that can be retrieved in the future.
Print or download PDF files of all important electronic transactions. Save them on a hard drive and/or on a thumb drive in well-organized folders. This can be a serious time saver later.
Start your collection now
Your loan file could include:
- checking/savings statements (update monthly, quarterly, or annually)
- investment documentation (update annually)
- retirement account information (update annually)
- documents relating to every asset you claim to own (update every two years)
- substantiation of gifts from relatives (update as needed)
- non-profit grant documentation (update as needed)
- creditor statements (update monthly, quarterly, or annually)
- income/expense records for all rental and investment properties (update monthly, quarterly, or annually)
- documentation of any loans for which you have co-signed (update as needed)
- proof of any assets for which you share ownership
- two years of filed tax returns (update these annually)
- employment verification and check stubs or deposit statements (update these monthly, quarterly, or annually)
- copies of vital records such as birth certificates and death certificates (update as needed)
- relevant marriage or divorce documents (update as needed)
Self-employed borrowers should be prepared to provide the above documentation and the following:
- an audited or professionally prepared balance sheet for the previous two years
- year-to-date profit and loss statement (sole proprietors)
- signed copies of the two years’ federal business income tax returns with all schedules (corporations and partnerships)
- a professionally prepared profit and loss statement
Certain circumstances might require additional documents. Be prepared to cooperate fully with your underwriter for peace of mind and a smooth loan process.
Call me at 801-673-3333 if you have questions about building a loan file. I’ll ensure you’re directed to the right professional to help you.
