The Truth About Mortgage Documentation: Why Itās So Hard and Why It Has To Be
A long post. Sorry. I was inspired The loan officerās job is hard ā really hard ā especially when it comes to documentation requirements. There are guidelines, and every single deal is different. So please, donāt shoot the messenger. The more moving parts there are, the harder it gets. When a client gets pre-approved for a mortgage, hereās the problem. Most lenders donāt gather all the necessary documentation up front because it would overwhelm the client at that point, and itās really not necessary yet. A good loan officer can identify if the deal will work based on the documentation thatās been provided. Thereās nothing shady about this ā itās just the process. A good loan officer typically needs to see pay stubs, W-2s, tax returns, asset information, and credit. With that, they can run the file through the desktop underwriting system and know if the deal works. And yes ā some lenders actually issue pre-approvals without verifying any documentation at all. This is incredibly unprofessional, and most people donāt realize how bad that is. Thatās not a real pre-approval ā itās a pre-qualification. A good lender knows the difference and takes the time to get it right. Hereās the deal: a good loan officer will ask for everything necessary to be certain the deal will go through. If thereās a page missing or a signature missing, we donāt ask for it yet, because at that stage, itās not necessary to put the client through all of it. But once the loan goes into processing, weāll need everything. Thatās why pre-approvals can be turned around pretty quickly ā because we know what weāre looking for and we can see that it works. But letās be clear ā nothing is certain until the closing. If a borrower loses their job before the closing, that loan is done. It doesnāt matter if we already have pay stubs, W-2s, and tax returns showing what they used to make. It doesnāt matter if they used to make a million dollars and the loan amount is only $300,000. If theyāre fired and now have no job, their income is zero. Period.