When I began in this business, I was trained to ask for, “Two, two and two,” from all of my borrowers.  That means two bank statements, two W-2’s and two pay stubs.  Two tax returns would work in place of pay stubs and W-2’s for self-employed borrowers.  At the time, I was working for a direct lender and everything was pretty cut and dried. 

Today I have the capability to broker a loan to a wide variety of lenders.  The documentation requirements for each loan depend on the lender and the borrower’s circumstances.  “Two, two and two,” still works in many cases, but there are many times when alternative income documentation provides a more attractive loan package.  The most significant alternative method of documenting income involves the use of bank statements; from 12 to 24 months of bank statements.  While these can be ordered from your bank, it takes time to get them and there is usually a $5 charge for each month you order.  Also, Internet printouts do not work.  Underwriters insist on having the original statement or a bank reprint.  Furthermore, they are required to have all pages of each statement, even if the statement includes a blank page.

My advice; keep every page of every bank statement for two years.  Life happens.  The circumstances of our lives change.  Standard documentation methods might work just fine for you right now, but will they work for you in the future?  Being prepared can save time, money and unnecessary stress.

There are other documents that are sometimes required, or helpful, and should be kept on file.

• Your most recent quarterly asset statements.  These include investment accounts with stockbrokers, retirement accounts and 401K’s.  They show the underwriter your financial backing and minimize the lender’s risk.
• Twelve months of cancelled checks (checks that have cleared the bank) for real estate rental payments.  If you pay by money order, save the money order receipts.  Do not pay cash, even if you get a receipt from the landlord.
• Your Home Owner’s Insurance Declaration page.  This provides the processing department all the information that they need to order the new insurance binder on your mortgage refinance.  If you wish to shop for a new insurance company, provide the contact information of the new company instead.
• Your mortgage coupon or most recent mortgage statement.  This provides the processing department all the information that they need to order the payoff on your current mortgage.
• Cancelled checks from property tax payments, if you pay your own taxes separately from your mortgage payment.
  

Carl Harder President Great Choice Mortgage