Mortgage

Loan Interview

We Do It Right The First Time

Federal laws, as well as certain other guidelines, control how your loan is processed, underwritten and closed. These guidelines change periodically and may be modified from time to time by the lender, an investor who may be purchasing your loan, and/or an insurer or a guarantor based on the loan program for which you apply. In general, the process works like this:

• Step One: Loan Interview
• Step Two: Loan Processing
• Step Three: Loan Submission
• Step Four: Loan Underwriting
• Step Five: Loan Closing

Step One: Loan Interview

The first step in obtaining a mortgage is the initial loan interview with a Silverado Home Loans loan consultant. At the time of the interview the loan consultant will discuss with you:
• The type of loan best fits your needs.
• Terms of the loan for which you are applying.
• The necessary income and credit qualifications of the loan for which you are applying.
• Terms and conditions under which an interest rate and discount can be obtained.
• Receive and review required disclosures and informational booklets. We may also mail certain disclosures to you for your review.

The Uniform Residential Loan Application (URLA), once completed, will contain information such as:
• The terms of the loan you have applied for.
• The property you are purchasing or refinancing.
• Your personal and financial status and history.
• An agreement that you are to read and acknowledge the “government monitoring” information for the federal government (completion of which is optional, but if you chose not to provide the information, Silverado Home Loans loan consultant must complete the section based on either visual observation or surname).

You will be required to sign a few authorization forms (these too may also be mailed) which we will use to verify the information provided by you on the URLA. We will need the following from you at the time of the initial interview:
• Signed copy of the purchase money contract/escrow instructions. This document must be acceptable to Silverado Home Loans, the lender, the investors, insurers, or the guarantor.
• Checks for Residential Mortgage Credit Report (RMCR), property appraisal, and any other initial application fees.
• If you are not a US citizen, you will be required to provide a copy of your Immigration and Naturalization Service card (your “white card” – previously: “green card”).
• Residence Addresses for the past 2 years, with landlord addresses, if applicable.
• Name and address of employers for the past 2 years, with W-2’s, 1099’s, etc. – Most current pay stubs for 30 days, showing gross income and all deductions.
• Names, addresses, account #’s, and balances of all checking and savings accounts.
• Last 2 statements for checking, savings, investments, IRA accounts, etc.
• Names, addresses, account numbers, and monthly payments on all charge accounts.
• Addresses, loan info, and lease agreements on all other real estate owned.
• If self-employed: 2 years of tax returns, with all schedules, balance sheets, and profit & loss statement.
• If a corporation or partnership: All of the above for corporation and/or partners.
• Copy of plans, specs, and signed proposal for new construction.
• Copy of HUD-1 Closing Statement on purchase or sale of home or lot within last 12 months.

 

 

 

 

 

 

 

Loan Processing

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The second step is the actual processing of the loan which is no more than gathering information and documentation to substantiate the information on the URLA and to prove your creditworthiness to any potential lender, investor, insurer, or guarantor.

When your loan application is received by loan the processing department, the loan application is reviewed to determine if any additional documentation is needed for the submission package. If the initial application is incomplete, you will be contacted to provide additional information. After the application is reviewed, the processing department will then proceed with ordering the required documentation to get the loan file ready for submission to the lender. Documentation such as the appraisal report, credit report(s), verifications of employment and deposit, rental history, mortgage payment history, and any other documentation required by the lender, investor, insurer, or guarantor.

1. Income: We must establish that your income is stable and re-occurring. A two years history of income is the usual guideline for stability (at the minimum, in the same line of work, or training for that line of work). The probability of continuance for the next three years is frequently the guideline. You will be asked to provide current pay stubs for all salaries, commissions, etc.
• Regular Salary Income: verification of employment is required. It can be in the form of a written verification or a current paystub that shows current and year-to-date earnings; we may make a phone call to your employer to verify the information. All applicants will be required to provide their most current paystub and previous two years W-2 statements.
• Income from Commissions, Stock Dividends, Interest, Capital Gains, Rental properties: we require two (2) years of complete (all schedules) federal income tax returns along with a year-to-date income/expense statement; in the case of rental income a copy of all current lease(s).
• Income derived from Self Employment, Partnerships, or a Corporation you own: we require two (2) years of federal individual income tax returns (IRS 1040’s). If you own more than twenty-five percent (25%) of a partnership or corporation, we require two years of complete federal partnership/corporate tax returns. In addition, we will need a year-to-date income statement (through the most recent full quarter), a balance sheet, and a business credit report.
• Income derived from Child Support or Alimony: assuming you choose to disclose such and wish it to be considered as part of the application, a copy of the court-filed divorce decree and the property settlement agreement will be needed along with evidence of receipt of timely consistent payment have been made for the previous twelve (12) months.
• Income derived from social security, pension, or other retirements: we require a copy of the award letter, recent pay statement, and prior years W-2P if available.

If any of the verifications contain conflicting information (e.g. monthly income and year-to-date salary cannot be reconciled), a letter of explanation from your employer or other supporting documentation will be required. If there are discrepancies in employment dates, additional employment history or a letter of explanation from you concerning employment “gaps” may be required depending on the nature of the discrepancy and its effect on your employment history. If income increases do not look probable or if decreased income is evidenced, a letter of explanation from you, your bookkeeper/accountant, or your employer, as the case may be, and other supporting documentation will be required. If tax returns indicate large expenditures in legal fees or other expenditures that might be of concern, a letter of explanation from you or your bookkeeper/accountant and supporting documentation may be required.

2. History of Residence: A two year history of your residence is required with supporting documentation (mortgage verification for residences owned and rental history for residences rented). Any indication of late/slow payments or non-payment must be satisfactorily explained by you. Supporting documentation may be required.
• Mortgage Loan History: we can verify your payment habits on your current/previous mortgage loans either through the credit report, direct verification from the lender, or copies of your last 12 months canceled checks (front and back).
• Rent History: we can verify your payment habits on your current/previous rental either through your landlord or copies of your last 12 months canceled checks (front and back).

3. Assets and Funds to Close: We will need to verify that you have sufficient liquid assets at your disposal to consummate the transaction. The lender may also, depending on the loan program, require you to have liquid assets left after closing equal to two (2) months of mortgage payments. (On low documentation loans, the lender may require you to have liquid assets after closing equal to six (6) months of mortgage payments.) The lender will accept a variety of documents to show that you have enough funds on hand to close the loan:
• Verifications of Deposit (VOD): we can mail verification directly to the bank/stockbroker. We ask for the account number, account balance, average balance, and date the account was opened.
• Bank / Broker Statements: we will also accept your three (3) most current consecutive bank statements. We will need the original so that we can make certified copies
• Home Settlement Statement: if you just sold your home and received sufficient cash from the sale to close on the new home, we will accept a certified copy of the document
• Other sources: if you recently received a large sum of money, sufficient to close on the new home, we will need the supporting documentation and evidence of the actual receipt of the funds by you such as a bank statement showing the deposit.

If the verifications (deposit verification, 3 months bank statements, Trust Statement, Stock Statement) indicate an account has been opened for less than six months, the source of the funds in the account must be documented. If the two months average balance is not disclosed copies of the previous two months account statements will be required. If the two months average balance is substantially less than the current balance, the source of funds for the increased amount must be satisfactorily disclosed. If the verified liquid assets are insufficient to evidence funds for the down payment and closing, the balance of the necessary funds must be satisfactorily evidenced
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4. Liabilities and Credit Report: Silverado Home Loans will obtain a “Residential Mortgage Credit Report” as required by the lender. A few things to be aware of:
• If the credit report or direct verification of loan indicates any derogatory (late/slow pays, collections, judgments, liens, bankruptcy) information, a letter of explanation from you and, if applicable, supporting documentation will be required. If any accounts refuse to rate, to indicate the monthly payment or balance due, you will be required to provide evidence to complete the unconfirmed information (most recent statement of account, copies of canceled checks to indicate the manner of payment, etc.).
• If you have failed to disclose a debt or legal matter, a letter of explanation indicating the reason for non-disclosure or other information may be required depending on the nature of the information not disclosed.
• If you dispute the information provided by the credit reporting agency, you should make an appointment with a representative of the credit bureau and ask for their assistance in clearing up the discrepancy.

5. Appraisal: An appraisal is required on most transactions. A licensed appraiser will go to the home, make an inspection, and take some measurements and photos. He/she then research the local market for sales of similar homes in the immediate area. With this data, a written appraisal report is prepared and delivered to the lender. A few things to be aware of:
• If the appraisal indicates that any repairs are necessary those repairs must be completed prior to closing.
• If the appraisal indicates that any certifications are necessary (pest, roofing certification, engineer’s report), a “clear” certification will be required prior to loan closing.
• If the appraisal indicates the property has a well, a water test will have to be done to show that the water is safe and the well functional.
• If the appraisal indicates there is a septic system, a statement that the system is safe and functional is required from the local health authority prior to closing.
• If the appraisal indicates there is the joint use of the driveway, access easement, and retaining wall (as in a row home), a copy of the formal, recorded agreement between property owners outlining usage rights and maintenance responsibilities is required.
• If the appraisal indicates that the property is not on a municipality-maintained road, a copy of the formal, recorded road maintenance agreement is required
• If the power source for heat and electricity is other than municipal, additional documentation regarding the source may be required
• If the property is in a designated flood hazard area, flood insurance will be required in an amount equal to the lesser of the maximum amount of insurance available or the loan amount (make certain that you discuss contents coverage and replacement cost with your agent).
• If the property is considered “new construction” a soil report, engineer’s compliance letter, and Certificate of Occupancy may be required.
• If the property is part of a condominium project or planned unit development, the project or development must be acceptable to the lender and approved by the investor, the insurer and/or the guarantor. Documentation required for approval varies, but generally consists of the declarations, bylaws, master deed, two previous years’ budgets, hazard and liability insurance evidence, fidelity bond evidence, sale/occupancy information and, in some cases, minutes.

6. Additional information may be required in unique circumstances.
When the required verifications and documentation are received, a review is conducted to determine if any additional documentation will be necessary. We will inform you of any additional documentation information you are required to provide. Any additional information regarding the property is generally requested from the appraiser.

 

 

Loan Submission

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If all of the documentation is in order and appears to meet the lender and investor guidelines we then compile the documents into a “submission package” which will provide the underwriter(s) with a clear picture of your financial situation and the property that will be used to secure the loan.
We will prepare a “final application” using the information received. Depending on the circumstances, you may be contacted to review and sign the new application. Typically you will be signing it at loan closing.

If the review of the documentation reveals that the loan is not in compliance with the lenders or investor’s guidelines (not enough income to qualify for the new payment, insufficient assets, unacceptable credit history, etc) you will be contacted. We will attempt to cure the problem. If we are unable to, you will receive a “statement of credit denial”.