Financial & Mortgage Information Checklist

Financial Information Checklist

Here is a list of financial information many lenders require you to submit along with the mortgage application:

Pay Stubs which show most recent year-to-date earnings.
Last 2 years W-2 tax forms.
Employer information - last 2 years names and phone numbers.
Current Assets - IRA's, CD's, 401k, cash value of life insurance, stocks, bonds, car if paid in full.
Current Liabilities- auto loans, credit cards, and other installment debt, such as alimony or child support.
Copies of account statements- account numbers and balances of checking, savings, and any other accounts

If you are self-employed or work on a commission basis:

Copies of your federal tax returns
Current year-to-date profit and loss statement

MORTGAGE BROKERS VERSUS MORTGAGE BANKERS

Many consumers assume that “mortgage companies” are banks that lend their own money.
In fact, a company that you deal with may be either a mortgage banker or a mortgage broker.

A mortgage banker is a direct lender; it lends you its own money, although it often sells the loan to the secondary market. Mortgage bankers (also known as “direct lenders”) sometimes retain servicing rights as well.

A mortgage broker is a middleman; he does the loan shopping and analysis for the borrower and puts the lender and borrower together. Many of the lenders through which the broker finds loans do not deal directly with the public (hence the expression, “wholesale lender”).

CONVENTIONAL VS. NON-CONVENTIONAL

“Conventional” financing, by definition, is not insured or guaranteed by the federal government. Conventional loans are generally broken into two categories: “conforming” and “non-conforming.” A conforming loan is one that conforms or adheres to strict Fannie Mae/Freddie Mac loan underwriting guidelines.

Conforming loans are a low risk to the lender, so they offer the lowest interest rates. Conforming loans also have the strictest underwriting guidelines.

Conforming loans have three basic requirements:

Borrower Must Have a Minimum of Debt: Lenders look at the ratio of your monthly debt to income. Your regular monthly expenses (including mortgage payments, property taxes, insurance) should total no more than 25 to 28% of gross monthly income (called “front end ratio”). Furthermore, your monthly expenses, plus other long-term debt payments (e.g., student loan, automobile, alimony, child support) should total no more than 36% of your gross monthly income (called “back end ratio”). These ratios can sometimes be increased if the borrower has excellent credit or puts more money down.
Good Credit Rating: You must be current on payments. Lenders will also require a certain minimum credit score called a “FICO” (http://www.myfico.com).
Funds to Close: You must have the requisite down payment (generally 20% of the purchase price, although lenders often bend this rule), proof of where it came from, and a few months of cash reserves in the bank.

NON-CONFORMING LOANS

Non-conforming loans have no set guidelines and vary widely from lender to lender. In fact, lenders often change their own non-conforming guidelines from month to month.

Non-conforming loans are also known as “sub-prime” loans, because the target customer (borrower) has credit and/or income verification that is less-than-perfect. The sub-prime loans are often rated according to the creditworthiness of the borrower – “A,” “B”, “C” and “D.”

The sub-prime loan business has grown enormously over the past ten years, particularly in the refinance business and with investor loans. Every lender has its own criteria for sub-prime loans, so it is impossible to list every loan program available on the market. Suffice it to say, the guidelines for sub-prime loans are much more lax than they are for conforming loans.

	© 2006 GMP Homes, Inc. 227 13th Ave NE St. Petersburg, FL 33701 View Our Sales History Local Phone: 727-894-3900 Toll Free 866-894-3902
	Web Design by Pinellas Business Solutions, Inc.