What documents are required to get a mortgage?

This blog post has been migrated to my new blog, you can find it here:

What documents will I need to provide to get a home loan?

Some loans will require more or less documentation, but these are the basic documents required by the majority of lenders on average mortgage transactions: 

Employed borrowers: 

• Two most recent years of W-2 forms 
• Two most recent years of federal tax returns, personal (all pages)
• Most recent 30 days of pay stubs 
• Current mortgage statement (if refinance) 
• Purchase contract and copy of earnest money check (if purchase) 
• Two months statements for any asset accounts (checking, savings, 401k, IRA, etc.) 
• Homeowner's Insurance agent's name and number
• Copy of driver's license or passport

Self-employed borrowers: 

How to shop for mortgage interest rates.

Many people reading this article may not have much experience comparing interest rates and lenders and may be avoiding shopping for a mortgage out of anxiety. Here are some dos and don'ts from someone who works in the mortgage industry to help you navigate the experience:

Don't fill out multiple loan applications.

You don't need to complete a full mortgage application to receive an interest rate and fee quote. Some companies will train their employees to get an application to further the sales process before telling you what they can offer. The reality is that they can accurately quote you rates and fees without a credit report or loan application (assuming you provide them with enough information). It is important to note that the rate quote will be based on the information you provide. The home value, credit score or some other piece of information may change things later, but at this stage you are comparing lenders and the reality is that the best lender for you at a credit score of 740 is probably still the best lender for you if your score turns out to be 680.  

Do provide the lender with all the details.

What are the steps involved in the home mortgage process?

Every home mortgage process is a little different, but nearly all loans follow this same timeline of events.

Here is a quick overview of the steps nearly all loans will follow before the mortgage officially closes. 

1. The Application: In order to begin the loan process, a prospective borrower must first fill out an application.  There are three typical methods to complete this portion of the loan process; an online application, a face-to-face interview or a phone interview. Most of the information contained in the application is something a borrower would know off the top of their head, but some things require extra research.  
2. The Documentation Stage: In order to close a mortgage quickly and efficiently, it is imperative that the borrower follows up the application with the supporting documentation. Any delay by the borrower in gathering documents at this stage delays the entire loan process. The list of documents required varies greatly depending the circumstances of the borrower. Some mortgage professionals will collect only the bare necessities at this stage of the process to push the loan forward, while others proactively request everything they know will eventually be required at some point in the process. I personally believe it is best to provide as many relevant documents as possible upfront to lower the possibility of last minute issues or rushes.
3. The Appraisal & Title Work: The next step in the process is to order and schedule the home

Purchasing a Home - Who are the people involved?

This blog post has been migrated to my new blog, you can find it here: Who are the people involved in a home purchase?

In a typical home sale involving financing, these are the major players involved and some info about the role each plays:

Buyer's Agent: 

The buyer's agent is a real estate agent or Realtor who acts on behalf of the buyer in order to secure a new

property. This typically involves searching for properties, negotiating on a buyer's behalf and generally acting

in the buyer's best interest. Home shoppers and buyer's agents may or may not have an actual signed agreement in place for exclusive representation.

Listing Agent (Seller's Agent):

The listing or seller's agent represents the other party involved in the transaction, the seller. In a typical home sale, the seller enters into a listing contract with a real estate agent for the exclusive

New Jumbo Mortgage Programs Now Available in Arizona Including 10% Down Payment!

I'm happy to announce that while some banks are tightening guidelines and providing less options for homebuyers, W J Bradley Mortgage is offering more options to well qualified borrowers.

The latest product to come along will help those in the jumbo mortgage market. Here in the , there are plenty of homes that go well beyond the $417,000 conforming loan limits. Once you get above that $417,000 mark, the options for prospective home buyers get a much stricter.
Scottsdale/Phoenix area
greater

Here are some of the new products highlights we are currently offering: 

• 90% Loan-to-value (only 10% down payment!)
• Credit scores allowed down to 680 middle FICO
• Bankruptcy seasoning of 2-4 years depending on circumstances
• Loan amounts up to $3 million
• Only one appraisal required for loan amounts up to $2 million
• No first time homebuyer restrictions
• Up to 9% seller concessions

What are mortgage reserves and when are they required?

When a lender asks for mortgage reserves, what do they mean?

If you have applied for a mortgage or purchased a home recently, you may or may not have heard the term reserves. A reserve, in connection with a mortgage transaction, simply means money on hand for emergencies. When a lender requests proof of 2 or 6 months of reserves (the most common requests), they are simply stating that you will need 2 or 6 months worth of mortgage payments left in assets after the loan is closed. It is further justification that you are qualified and the mortgage will be paid on time each month.

When are reserves most likely required? 

Reserves are often not required on the purchase or refinance of a primary home for a well qualified borrower with higher credit scores.

Reserves can be helpful for those loans that are a little bit outside that box. Borrowers with lower credit scores, those purchasing investment properties or second homes or with certain other circumstances may be required to show that they have mortgage reserves.

How do you show reserves?

Multiple VA loans to the same borrower

Multiple VA loans to one borrower. Are you sure about that?

Yes, I am positive and have closed these transactions. Many veterans (and, frankly, loan officers) are not aware that it is possible for borrowers to have multiple VA loans at once. It is not common, but that could be due to the fact that not many people are aware of the possibility.

How does it work?

Each eligible veteran has a certain amount of entitlement. This amount is typically listed on a veteran's certificate of eligibility (COE). As a lender, I have access to the web portal to obtain a veteran's COE within minutes, so if you are unsure or would like to see if you are eligible, please call or email me or fill out my contact form.

The amount of entitlement is equal to 1/4 of the conforming loan limit in the property county, minus any entitlement that is currently in use. In Arizona, the conforming loan limit is $417,000 for all counties, so veterans are eligible for $104,250 in entitlement here in AZ. This entitlement is broken up into two categories, basic and second tier. Basic entitlement is $36,000 and is used for loan amounts equal to or less than $144,000 ($36,000 x 4). Second tier entitlement is used for loans over $144,000.01 and is the primary reason a second VA backed loan may be available to a veteran.

What is the most common situation that would allow for more than one VA loan to a veteran?

Finance up to 10 properties in Arizona!

How is it possible to have as many as 10 mortgages?

Many borrowers have been told by one or more banks that the maximum amount of homes allowed with mortgages on them is four. For many lenders, this is true.

Cardinal Financial offers financing for as many as 10 properties per borrower. Considering that each of the properties could be a 1-4 unit, that's quite a few units you could own as a real estate investor.

What are the limitations and how do I qualify? 

The limitations and qualifications are not very complicated for a seasoned investor to meet. They are as follows:

Delayed financing in Arizona - cash out one day after home purchase.

What is delayed financing and who could benefit from it?

Delayed financing is just a fancy way of saying that someone waits until after a home purchase to secure the home with a mortgage. The home is purchased with cash and then a mortgage is secured to the property after the fact. The mortgage process can start as little as one day after the home purchase. It is a little known and underutilized loan program. In fact, many lenders don't even offer this option.

What are the benefits of delayed financing?

Delayed financing allows a person to negotiate and purchase a home as a cash buyer, while also allowing them to leverage their investment after the fact. Many sellers are willing to lower their asking price or choose an offer for a cash buyer who is willing to close fast, so this can be a bargaining chip in the offer/contract process. This loan program also allows investment properties, so investors who need to free up cash for more purchases can certainly benefit from this.

What are the limitations of delayed financing?

How much does it cost to refinance a home?

There are many reasons to refinance and this post is a follow up to the post: Should I refinance my home mortgage?

The closing costs for a refinance can vary greatly from one mortgage to the next. The difference in closing costs between loans is due to 3 main factors; the type of loan, the rate selected and the mortgage company. Let's talk about each of these individually.

The type of loan

There are a large number of loans for borrowers to choose from in today's mortgage market and many factors that go into the loan program choice. The main four groups of loans chosen currently are conforming (conventional), jumbo, FHA and VA.

• Conforming loans are the ones you hear about quite a bit. With 20% or more equity in a property, borrowers typically choose a conforming loan because it doesn't have any monthly or annual mortgage insurance, the rates are very competitive and it doesn't have a program

Should I refinance my home mortgage?

Refinancing - how does it work?

The idea behind refinancing a home is that you are replacing the current mortgage with a new mortgage. The new loan is typically at a reduced interest rate, more desirable term, provides cash
out for various reasons or combines multiple debts in order to improve the homeowner's financial situation. At the closing of a refinance, the new home loan pays off the current financing and becomes the new lien on the home, releasing the prior lien(s). There are two main types of refinancing:

• Cash out refinance - As the name implies, in many cases a cash out refinance is when a borrower receives cash back at the closing. However, it may also mean that the borrower has paid off other debts as part of the process. Example: A homeowner pays off their current mortgage and some credit cards as part of the transaction, but doesn't receive any actual cash back at the loan closing. This is still considered a cash out refinance because the borrower is paying off more than the current loan amount.
• Rate and term refinance - A rate and term refinance is a loan process in which a current mortgage is replaced by a new mortgage with more favorable rates and/or terms. This is also called a limited cash out refinance in many cases. Rate and term refinances do not include the payoff of any other debts beyond the current loan balance...with one exception. If you are paying off a current first mortgage and a second mortgage or home equity line of credit (HELOC) that was used to purchase the home, it is still considered rate and term or limited cash out.

If I roll my closing costs into the loan amount on a refinance, is it considered a cash out loan?

VA home loans after foreclosure - it is possible with second tier or bonus entitlement

Sometimes mortgage professionals don't know their trade as well as they think they do. I answer questions for borrowers on several mortgage industry websites to help them better understand mortgages. On more than one occasion, I have seen this question:

Can I get a new VA loan to purchase a home if I have had a foreclosure with a VA loan in the past?

Most answers from mortgage professionals are flat out - "no". That is simply not the case. The actual answer is that a veteran will likely qualify for a new home purchase loan as long as they have enough remaining entitlement, the new loan amount is over $144,000.01 and they are otherwise qualified (call VA and verify this for yourself). Let's break down this down further with a few simple questions and somewhat complicated answers.

Do I have to pay back the foreclosure loss before I can get a new loan?

No, you do not. As long as you have enough entitlement left for a new loan on the home you are looking to purchase. If the entitlement is not enough, you are able to restore the amount wrapped up in a previous foreclosure by paying the VA back some or all of the loss (contact VA directly to determine this number). Once the loss is satisfied, you will have the entire entitlement available to you for a new VA home loan.

How much entitlement do I have remaining after my foreclosure?