This will be the first article in our new section “What It Takes To Close A Home Mortgage Loan”
While researching home ownership, home loan approval, various mortgage guidelines you’ll notice many articles that just do not seem to make sense in today’s marketplace. That’s because they do not. Many webmasters do not update high ranking articles with current updates and changes.
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Verifiable Qualifying Income
Having acceptable stable income is the biggest barrier to home ownership today… after the crash. Lenders are extremely cautious when considering loan applications, the part they scrutinize the most is your income documentation – then they look at your down payment and other qualifying factors before even accepting your loan application package into underwriting.
The most efficient way this is done is with a Uniform Residential Loan Application (form 1003), your recent pay stubs, W-2’s and Tax Returns for yourself and your business if self-employed. Your local mortgage broker or Banker will quickly check to see if your stated-income matches your claimed income using your documents and the completed 1003. Not all sources of income are allowed, your broker must also check for unstable income.
Once it appears you will likely qualify for a home mortgage, your broker will upload your file to the Fannie Mae Automated Underwriting System and you will be approved through DU OR FHA TOTAL SCORE. Some banks and brokers use Freddie MAC’s LP Automated underwriting System as well.
The typically is called an AU approval. It also has all of the conditions right on it you’ll need to address in order to receive a Commitment, Conditional Lender Approval, or Final loan approval.
Below I’ll post more information from a national wholesale mortgage bank – these are typical Lender Overlays or more restrictive guidelines the lender puts over the minimum Agency loan approval guidelines.
