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Should I Be Concerned About A Light Documentation Loan Offer?

March 26, 2014 by Scott Sheldon

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Absolutely yes, here’s why… On January 10, 2014, qualified mortgages took shape for the entire mortgage industry mandating lenders specifically document of borrowers ability to repay. Because of of these new regulations, if you receive a mortgage quote offering less the normal documentation such as not needing a pay stub for example if you are a W-2 wager, or only needing one year of income tax returns among others, this should raise questions.

The first question you would want to ask yourself is how is this lender able to do something that others cannot? Mortgage lenders don’t have a monopoly on the market all mortgage money comes from the same place with the exception of folio lenders which are usually local banks and credit unions who have niche products but still have ability to repay requirements which still requires full income documentation.

Following is the traditional list at the minimum, approved lender would request of you when determining whether or not to approve you for a mortgage.

→Two years of tax returns
→Two years of W-2’s
→Thirty-day pay stubs
→Sixty-day bank statements

Additionally, during the loan qualification process it is essential to let the mortgage lender run your credit report. There’s no way for them to issue a credit decision without a credit report in the name of the lender whom you are applying with. Credit reports are not transferable amongst lenders.

Beginning The Loan Process

Put together the financials, apply with a lender, allow to obtain your credit report. Doing this will allow you to accomplish your main objective which is to determine whether or not the figures are affordable in alignment with your goals and expectations.

Need a mortgage? Start by receiving a fast mortgage rate quote to purchase or refinance a home, it’s free!

 

Related Mortgage Advice from Scott Sheldon

  • Will "Qualified Mortgages" Help Consumers?

    On January 10, 2013, the Consumer Financial Protection Bureau unveiled new rules to help protect…

  • Will pulling a credit report for a mortgage make my credit score drop?

    Short answer-it depends. The majority of the time when a mortgage lender pulls a copy…

  • Which Mortgage Company For My Home Loan?

    How to select the right mortgage company for competitive rates. Choosing the right mortgage company…

  • What is the minimum credit score I need to buy a house?

    You will need at least at least the middle credit score of 640 or higher…

Filed Under: Credit Score Questions and Answers, Purchase Mortgage Loans Questions and Answers, Refinance Loans Questions and Answers

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Scott Sheldon, Senior Loan Officer
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Santa Rosa, CA 95405
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