Reasons Mortgages Get Held Up in Underwriting – An underwriter for a mortgage, in a sense, has the job of playing the “bad cop” role in approval. They are tasked with looking over all of the details with a fine-tooth comb. They look over every detail of a mortgage application to the n-th degree. They make the decision of whether the mortgage should continue on to final approval and purchase of a property, or if it is too great of a risk for the lender to assume.
It is not uncommon for the loan application process to get held up in underwriting. There are many reasons why this can happen. Most often it is because they are asking for more information backed with proof of paper documentation. It is not likely you will be able to predict every item an underwriter will want to scrutinize that will hold up your approval process, but there are some things you can be prepared for to help the process go more quickly and smoothly.
5 Reasons Mortgages Get Held Up in Underwriting
Copies of Bank Statements
This is one of the most often requested items from an underwriter. This is most often asked for before your application hits the underwriter, but the loan officer or mortgage broker you work with might only ask for one or two months’ worth of statements at the time of the application. By the time underwriting receives the paperwork to look over with their fine-tooth comb, this may not be the most up to date information and they will want a more current statement. This is especially true when applying for a bank statement loan.
Tax Returns and IRS Transcripts
For traditional conventional loans, the most often required income verification paperwork is two years of tax returns. For some self-employment loans an underwriter may want to see transcripts from the IRS.
1099s or W-2s
If underwriting already has two years of tax returns it may seem silly to provide these items to them. In some cases, an underwriter may want to make sure they have extensively dotted every I and crossed every t they can to ensure they did their portion to the best of their ability. So if asked for these things, just have them at the ready to quickly hand over.
Letter of Explanation (LOX)
If an underwriter finds something that piques curiosity in your financial records, they may want some more information from you as to the reasoning behind it. For example: a money transfer, something unusual in a credit report, or a large deposit from somewhere other than an employer.
Verification of Employment
This one has become much more important since the beginning of the COVID pandemic. At the beginning so many jobs where unstable and some still currently are. This is something a lender will most often request directly from your place of employment. They will most often ask about your job history and the projected likely future you have with the company in your current job title as well as your salary.
For more information on your mortgage options in Mission Viejo and surrounding areas please contact me any time, including bank statement mortgages and jumbo or super jumbo loans, please contact me anytime.
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