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What is the Perfect Loan File?

Phil Jawny Mortgage Banker

Thinking about buying a house? The good news is that it’s no longer a necessity in some cases to have a perfect credit rating or large down payment and even a stable employment to guarantee a loan approval. What is necessary is a perfect credit file. You may wonder what a perfect credit file is and in this article we will discuss the importance of the perfect credit file.

Forbes said it best “Every nook and cranny of your financial life has to be corroborated, double- and triple-checked, and reviewed again before closing. This way, if the originating lender has created a loan file that is exactly consistent with published underwriting guidelines and has documented while adhering to those guidelines, the chances are that your loan will not be subject to repurchase.

Borrowers also need to prepare for processing and underwriting. Processors and underwriters are the people trained and charged with gathering (processors), all of your required-for-approval financial documents, and then approving (underwriters), your loan. You can assume these people are well trained and very experienced, as they are tasked with assembling and approving a high-quality-these-people-will-pay-us-back loan file. But just how do they go about that?

The filter determines whether the information provided by the borrower can be validated and documented. This is simple, since most mortgages are approved by automated underwriting engines such as Desktop Underwriter, and the automated approval generates a list of the documents needed to paper the loan file. An underwriter can, at this stage, request additional supporting documentation evidence at their discretion, as not all circumstances neatly fit into the prescribed underwriting box. If the filter creates a loan file with accurate information, then secures the documentation resulting from the automated underwriting findings, the loan will close uneventfully.”

The next step is the preapproval process. During a phone consultation or pre-qualification the following information is obtained verbally;

  • Income
  • Assets
  • Employment
  • Credit Report Ordered

Based on how you answered the above questions as well as your credit report you are given a Good Faith Estimate of the loan amount you may be able to qualify for, possible interest rate and down payment amount if any. You will also receive a truth –in-lending statement, state disclosures and a letter from the lender concerning the terms of expected financing.

During the pre-approval process the underwriter has physical copies of the following;

  • Paychecks
  • Bank Statements
  • Verified Employment
  • Mortgage and Rental History
  • W-2s
  • Tax returns

The pre-approval is issued by the underwriter and is considered an approval pending certain conditions to be cleared. Most pre-approval letters are good for 60 to 90 days. Pre-approval can take from 24 to 48 hours.

After the initial filter and preapproval process it is important to answer the questions asked truly and accurately and provide needed documentation immediately when requested. You may be asked several times at some point in the loan process for the same documentation but it is important to follow through to ensure a smooth process and perfect loan file.



About PhilJawny

Award winning mortgage banker with over 14 years of experience.


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