When taking out a loan and borrowing
money from a mortgage loan company, there are many things to consider and often
many obstacles to overcome. It isn't as simple as just signing a piece of paper
and promising that you will pay back the lender in the documented time frame or
in the documented installment payments.
As the recent years have
illustrated, mortgage lenders are concerned about borrowers who will default on
their mortgage loans while even some lenders themselves have focused on their
best interest rather than that of their customers. When taking out a mortgage
loan, it is very important that you know who you are dealing with, so it is
best that you do your research, learn about the mortgage company, what others
have experienced, and what type of mortgage programs are best for you to ensure
they recommend those to you.
The
Underwriting Process
The underwriting process is where a
lender assesses the risk of issuing a borrower funds and then decides if it is
worth the risk to issue the money to the borrower. Typically, a document is
presented to the borrower, showing in detail all of the risks being taken and
the consequences for not paying the money back. By signing the document, you
are agreeing to the risks and terms and have officially become the owner of a
mortgage loan – and a house or commercial property, of course!
Changes
to the Underwriting Process
Many people already don't like the
procedures and complications that are associated with underwriting. And,
chances are, if you have not taken out a loan in recent years, you don't know
yet but things are changing. While you may not agree with the changes, these
are the facts.
What's new? What's been altered or
added? While mortgage lenders already wanted to see your bank statements now,
they are now looking into a lot more. For instance, they want an explanation
for every amount of unexplained funds in your bank account.
They need to know where that 20 spot
came from – Did Grandma gift it on your birthday? Or, is it a loan? The point
to this is they need to know if you are borrowing money from another source.
This is because they want to make sure you are in the position to pay back what
you are promising.
Credit inquiries must be explained
as well as any new lines of credit taken out. The primary reasons for these
extra checks are to ensure that you are not hiding properties or trying to flip
them. Lastly, there is now an IRS document that needs to be completed known as
the 4506-T.
Simply put, it allows the lender to
contact the IRS and get a copy of your tax returns and verify your income.
Being that the document also falls under the Patriot Act, if you happen to be
self-employed, then you still must use the document.
We’re
Here to Help
We do hope that we have shed some
light on some of the changes in the process of underwriting. If you have more
questions, remember that no one cares more about your loan as we do --
Albuquerque's best choice lender!
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