Every week, we ask a real estate professional for their Short List, a collection of tips and recommendations on an essential topic in real estate. This week, we talked with Jessica Jakulski, a mortgage banker with BankSouth Mortgage, on the documentation snafus you should avoid during the mortgage process.
Due to strict guidelines, a fair amount of documentation is required to get approved for a mortgage. Every scenario is different, so the document requirements can vary with each loan. Make sure your clients disclose everything to their mortgage banker, so the banker knows exactly what to ask for. The process will seem a lot easier if your clients know what to expect before going under contract.
Here are some helpful tips on what to provide and look out for:
5. Get Organized – Before your clients start looking for a home, have all of their financial documentation organized and ready to go. At a minimum, they must be prepared to provide two years tax returns, W2s, paystubs, bank statements, etc. Once they go under contract, the process must move quickly, due to contract deadlines, so having all the paperwork together will save time.
4. Tax Returns – The most recent two years of tax returns are typically requested. Make sure your clients provide all pages of the federal return, including all schedules. If your clients have schedule E income, the K1 is also needed, and if they have 25 percent or more ownership in any company, business returns as well.
3. Bank Statements – Be prepared to provide the most recent two months of any account your clients plan to use for funds to close or reserves. They must include all pages of the statements, even if some are blank. Make sure the statements have identifying information on them – the clients’ and the last four digits of their of account number. If they have any large non-payroll deposits, make sure they source them with a copy of the check deposited and/or explanation. Also, your clients should avoid depositing cash into their bank accounts, as it is almost impossible to source. If they are using retirement funds for their down payment, they should also send the terms with withdrawal.
2. Gift Funds – If your clients plan to get gift money from a family member, they will be required to show the transfer of funds between them and the gift donor. Give the donor a heads up about that, so they aren’t caught off guard when financial documentation is requested for this transaction.
1. Final Miscellaneous Points – Your client must be prepared to provide contact information for someone who can verify their employment at their company. Also, they cannot open any new credit or allow anyone to pull their credit prior to closing – otherwise it could change their approval status and create more documentation requirements.
Jessica Jakulski brings more than five years’ experience to the mortgage industry. With customer service as her No. 1 priority, Jessica prides herself on her ability to always keep clients in the loop and ensure that they feel comfortable by the time they reach the closing table. Prior to becoming a BankSouth mortgage banker, Jessica studied under one of BankSouth’s top producers, allowing her to perfect and understand every aspect of the mortgage process. Jessica also loves working with first-time homebuyers. She takes the time to explain the entire mortgage process to them and strives to put them in the ‘best fit’ loan program for their individual needs.