*Note: This was written by a Yahoo! contributor. Do you have a real estate story that you’d like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
Much has been made recently of the ability of consumers to get first mortgages or refinance their existing mortgages. I am now in the process of going through the experience. Here is my experience with the new reality of mortgage paperwork.
Rules have tightened considerably since the banking crisis of 2008, and people view that from two different perspectives. Some say that’s a very good thing. They would argue that we wouldn’t have the massive backlog of foreclosed homes and a sluggish housing market now if lending institutions had been more vigilant about their lending practices. Those on the other side of the debate argue that the housing market is unlikely to pick up if people can’t get mortgages or refinance their current ones.
This is not my first rodeo, as the saying goes. This will be the fourth home I have owned (and last, as I have told my wife), and I also refinanced home #2, so I have dealt with lending institutions many times before. There is no question, though, that things have been bolted down since we bought our current home in 2005.
I might add that we should be a loan officer’s dream customers. I have been at my current job for 21 years, my wife eight. I have had a mortgage since 1994 and have never missed a payment. We have no car loans and no credit card debt. Our income-to-debt ratio is quite low.
Here is what I needed to show to get a mortgage this time:
Three Years of Earnings
This time around I needed to bring copies of the last three W-2s for both my wife and me. I don’t remember doing that for any of the other times I secured a mortgage. It seems like a logical thing to ask for, though, so maybe my memory is going. I think in the past they called to check that I was employed and that was about it.
Last Three Paychecks
Our banker asked to see the last three paychecks for both of us, and they needed to show year-to-date totals. I thought asking to see both W-2s and paychecks was a bit redundant, but that is what they asked for, so that is what we brought.
Three Months of Checking and Savings Statements
This was definitely a new one for me. Our mortgage officer said this was to show “money going in and out of our accounts.” I wasn’t sure why they needed to see these statements considering I had already verified our incomes two different ways, nor was I convinced it was any of their business. Maybe they wanted to see if we had lied about our current debt obligations. But they have all the money, and I want to borrow some of it, so I did as I was told.
Copies of Our Driver’s Licenses
Here our loan officer gave a halfhearted joke about “making sure you’re not terrorists.” I didn’t get the joke. I bet lots of terrorists have state-issued driver’s licenses.
Statements of All Assets
Because we are buying a second house while we still own our current one, we had to show six months of reserves on both mortgages. It didn’t matter that we have a signed contract to sell our current home and the closing date is nine days after we are buying our new home. Because of that requirement, I had to provide statements for all assets as well as terms of withdrawal for retirement accounts even though I have no intention to withdraw any of that money.
I am very organized when it comes to financial documents, so finding what the bank required was a bit of a hassle but not particularly difficult. People who don’t keep track of documents, however, will definitely have problems under the new reality of mortgage shopping.