Understanding the Players
I take care to educate home buyers about how the loan process works, so they can make good decisions. Two things you need to know first:
Two Basic Tenets of the Mortgage Underwriting Process
- Mortgage lending makes zero common sense.
We have to work with a series of arbitrary rules and guidelines that risk managers publish. The bank underwriter has to meet these guidelines in order to release the funds of the loan to the borrower (you).
- The bank underwriter’s job is to kill the loan.
They are not in the business of making loans — they are in the business of killing loans. In other words, their job is to find a reason not to release funds to the borrower (you).
My Role in the Loan Process
As a correspondent lender with broad wholesale access, my job is to understand these arbitrary guidelines as well as the underwriter does. This enables me to structure your application in such a way that the underwriter doesn’t have to do too much thinking to say YES. More about Vic »
Over 150 Lending Partners
My company Straight Deal Mortgage has access to virtually every loan type available. See all loan options.
How the Loan Process Works
The more you understand about how the loan process works, the easier it will be for you to make good decisions.
STEP 1. Free Consultation and Preliminary Assessment of Loan Options
There is no obligation when meeting with me. I am happy to meet with you to discuss your situation and answer any questions you may have about the mortgage lending process.
If you are ready to move forward, I will collect your data: basic personal information, name, date of birth, your two-year residence history, and your two-year job history.
There are three basic data points we use, to determine your options as a potential borrower:
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Credit
We look at your credit score, the length and depth of your credit, your credit history, your present credit profile, and what types of monthly recurring liabilities you are paying, including other loans or mortgages.
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Income and Employment or Job History
Are you an employee with a W2? Do you work full- or part-time? How long have you been working in this job? Are you self-employed? Do you have income from rental property?
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Banked Assets
Non-retirement and retirement assets, 529, any money that is in any type of institutional financial account, including checking, savings, money market, mutual fund, stocks, bonds, securities, IRA. Note: loan underwriters do not include personal property, i.e.: cars, jewelry, et al., as assets. Lenders not only want to see that you can cover costs, but they also may want verification that you have emergency funds available in case of job loss.
STEP 2. Documentation
During the free consultation part of our relationship, we gather the documentation needed to support the information collected in Step 1. This may include W2s, tax returns, pay stubs, and/or two-months of bank statements.
Seasoning
Assets have to be verified for two months. This is known in the industry as “seasoning.” So, if you have an influx of cash from an undocumented source, a.k.a. “mattress money,” it has to sit for a bit. Thus, two months of bank statements are required. Seasoning must take place PRIOR to submitting the loan packet for underwriting.
STEP 3. Assemble the Application and Select the Underwriter
Still working for free here, I put together your loan application in a detailed and accurate way, in order to get your loan approved by the underwriter. Remember, this is the person who is paid to find reasons not to loan to you.
And this is why you don’t want to use one of those online services. They are simply trying to hook you by collecting your raw data and from a shallow assessment, determine if you are a worthy customer of their single product or limited set of products. They don’t care about the nuances of your situation, nor in finding the right loan for you.
As someone who knows how the loan process works inside out, I understand how to analyze all the supporting documents. I will match you with the loan programs where their underwriting guidelines match with your data, your credit score, income, liquid assets, and desired loan amount. Then I create a complete packet for you and send it to the underwriters of loans that best suit your needs.
STEP 4. I Send in the Packet
My services at this point are still free.
Your packet goes to a lender or lenders for a formal underwrite.
At this point, they may come back to us with any requests for additional documentation or data to clear the loan.
The majority of the time, the packets I send in at this point clear for funding right away. This disciplined preparation is how I have closed purchase loans in 15 days or less since 2004 — a crucial factor in high-intensity real estate markets like California and the San Francisco Bay Area.
Self-Employment Income Verification
At this stage, if you are self-employed, the underwriter may require:
- a letter from a CPA or tax preparer
- a copy of your business license
- the appropriate tax forms:
- a corporate tax return or K-1, if you have one in addition to your W-2s and pay stubs for your income as an employee of your corporation
- for independent contractors, a copy of your Schedule C
We also have many loan options for self-employed borrowers who can’t qualify using traditional documentation, such as tax returns, because of income write-offs. We work with many lenders that offer alternative documentation programs, including bank statements, CPA-prepared P&L statements, 1099s only, and asset utilization/asset depletion.
STEP 5. Final Review and Escrow
I’m still on your team, working to get the loan funded on your behalf, for free.
At this stage, the lender releases the loan documents to escrow if that is needed, and the final closing begins. The lender reviews final documents one last time at this stage, and then if they are satisfied, they release the funds of the loan.
During this final review, the lender may call your place of work to verbally verify gainful employment; so don’t quit your job until after the loan is completed!
STEP 6. Collect Your Money
Almost every deal I vet initially will clear underwriting.
The overwhelming majority of what I submit for underwriting will close.
I have been originating loans since 1997, and I work on your behalf to get us here.
Now I get paid for services rendered. I set my compensation loan by loan and can use the value of the loan to offset my fee and eligible closing costs. See the full explanation of how I get paid.