Brian Emerson

Senior Loan Officer

NMLS: 400942

(612)203-5478

bemerson@edgehomefinance.com

Purchase Pre-Approval Information and Procedures

Bloomington Mortgage - Purchase Pre-Approval Information and Procedures

Purchase Pre-Approval Information and Procedures

Thank you for your interest in getting approved for a Bloomington home loan. This memo will give you an idea of how the loan process works. My goal is to provide the knowledge and information that you need to make a sound financial decision. Don’t hesitate to ask questions and if there’s something that you do not understand...let me know. I want you to be able to tell your friends about your positive experience with my team!

There two things that we need to do to get you pre-approved for financing:

Number 1: Go to my site and start the loan application: www.BrianEmersonLoans.com. You will need to enter your past two years of employment history and past 2 years of residence history. Number 2: Send me the documentation needed to get your loan pre-approved and issue a pre-approval letter. The letter is needed by the agents involved in any purchase offer you make. I know this seems like a lot of info to send; however, if you do this now, you’ll have 98% of the work done for your loan. Then, all you’ll need to worry about is finding a home.
  1. Driver License or other government-issued ID for all borrowers: Set copier/scanner on photo setting and enlarge to about 125% so your face is recognizable.
  2. Payroll Statements: the most recent 30 days for all borrowers.
  3. Social Security Award Letter, Disability Award Letter, Pension/Retirement Award Letter (if you receive income from any of these sources).
  4. W-2/1099 forms for 2016 & 2017.
  5. Federal 1040 Tax Returns for 2016 & 2017; signed & dated.
  6. Tax Returns: (if self-employed as a corporation or LLC): Federal forms 1120/1120S & K-1s for the past 2 years; signed & dated.
  7. Self-Employed: Year to Date Profit & Loss Statement on your business.
  8. Bank Statements: Past 2 months Checking & Savings. All pages; if statement says 6 pages - send all pages - even the blank ones. Send actual statements; NO screenshots.
  9. Asset Account Statements: Stocks, Bonds, Mutual funds, 401k, 403b & IRA or other accounts: copies of most recent 60 days statements with all pages. If a statement says 6 pages, send all six pages, even blank pages.
  10. Student Loans: Current payment letters
  11. Bankruptcy Petition & Discharge: (if you filed BK in the past 10 years)
  12. Divorce Decree: Final, signed decree. If paying Child Support and/or Alimony/Spousal Maintenance; we will need proof of payment history from the governing court authority.
  13. Gift Funds: If you are receiving a gift for the down payment; we will need the donor’s name, address, phone number, and email address.
  14. DD214: (if you are a Military Veteran)
Send the documentation in a PDF format and in the interest of efficiency and to ensure that items do not get misplaced; please send all information at one time. Send to: bemerson@edgehomefinance.com
Once I receive this information, I will review your credit report and run it through our Automated Underwriting System for a pre-approval. I will then issue a Preapproval Letter for you and your Realtor. You will now be able to look at homes with confidence that you qualify for financing. A preapproval is not a guarantee of final approval on your Bloomington mortgage. This is the first step in the loan process. A full credit approval is the goal which means that a loan underwriter has reviewed all required documentation and has approved your loan; what is known as a “Loan Commitment.”

Why Do We Need So Much Information?

If you had $200,000 to hand out to complete strangers, wouldn't you be cautious who you gave it to? Of course, you would! Therefore, you will be asked many questions about you, your finances and your credit. You’ll need to disclose everything. The mortgage approval process is so rigorous because of the devastating mortgage crisis we all experienced. Lenders must be cautious and confident that a borrower can repay the loan. Why? The mortgage process is a great equalizer; borrowers must prove that they have the “Ability to Repay” the loan as required by federal regulation from the Consumer Finance Protection Bureau. No matter how much documentation we collect up front, you will likely be asked to produce more during the process. Accepting that multiple requests for documentation necessary for lender approval and making those documents available as soon as possible will make the approval process easier. The Loan Originator (Me) is the first set of eyes. My processor, Kelli, is the second set. The underwriter is the third set of eyes. Quality Control and Doc Preparation are the fourth and fifth sets of eyes. We try to get everything up front, but we're not finished until all eyes are satisfied and we are at the closing table. As an underwriter, when a borrower (or someone they need a document from) doesn't provide requested documentation, the question asked is, "What are you (or the person you need that documentation from) trying to hide?" You do not want an underwriter asking this question. It’s in your best interest to cooperate. Remember, the lender is providing the largest check at the closing. If the underwriter asks for a specific document, give them precisely what they are requesting, not what you think “should be OK” – because it won’t be. This is where the approval process tends to go ‘off the rails’; we ask for a specific document and you send something else. If we ask for a bank statement and there are 5 pages for that bank statement, send all 5 pages and not just the summary.

More Important Information

  1. Interest Rates: There is really no such thing as an interest rate. The rate offered to you is be based on several factors which include your credit scores, down payment, debt-to-income ratio, and other factors. These Price Adjustment Factors determine what rate and terms I can offer to you. For example, a borrower with a credit score of 740 and higher will be offered a lower rate or lower costs than a borrower with credit scores in the 680 or below range. This is known as Risk-Based Pricing. Your interest rate will depend upon the specific characteristics of the loan and your credit profile up to the time of closing.
  2. Locking the Interest Rate: Interest rates quoted are subject to change at any time with market conditions; they change constantly, just like the stock market. You have two choices; you can ‘lock’ your loan or ‘float’ with the market. Your interest rate can be ‘locked’ when we receive a purchase agreement. When you ‘lock’ the interest rate and terms; you’re protected from possible rate increases during the processing of your loan. However, don’t expect to get a lower rate if rates do go down during the processing of your loan. If you ‘float’; you are not protected from rising rates. It is up to you to determine when to lock. This means that you will have to contact me to find out what the rates are on any given day.
  3. Closing Costs and Pre-Paid Expenses: All mortgages have costs and expenses associated with obtaining a loan. These costs consist of the appraisal, credit report, title update, and title insurance, along with the various government fees and mortgage registration tax, etc. Closing costs can be paid by you at closing. They can be paid by the seller as “seller paid concessions” or they can even be paid by the lender as a closing cost credit. I will be happy to discuss this in more detail with you.
  4. Appraisal of the Property: The appraisal establishes the property value and is determined by an inspection & evaluation performed by a licensed appraiser which is subject to review and approval by the loan underwriter. Appraisal cost is approximately $475.00 to $575.00 and is paid when we receive your purchase agreement. You will receive a copy of the appraisal.
  5. Gift Funds: Gifts are allowed on most loans to help with the Down Payment and other costs. There are specific requirements as to who may give the gift, usually a relative, charitable organizations, employers or government agencies, etc.
  6. Funds Needed at Closing: All funds required for this transaction must be verified and come from accounts listed on the application. Funds to be in the form of a cashier’s check or wire transfer.
  7. Bank Accounts: During the loan process, do not deposit any large amounts without supporting the deposit with a paper trail (send a copy of the check and deposit receipt to us) and do not transfer funds from one account to another.
  8. New Credit after Application: Just prior to the closing of your loan; all lenders will pull your credit again and review it for changes and any new debts. Do not apply for and do not incur any new loans or debt during this process. Do not make purchases that will increase your monthly obligations. This could result in lower credit scores and higher debt ratios which could disqualify you for financing.
  9. Homeowner Insurance: A One Year Hazard Insurance policy is needed to protect your home in case of fire, storm or other damaging events. You can shop for this policy once you have signed a purchase agreement.

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