Common Questions

COMMON QUESTIONS

What documentation do I need in order to get a home loan?
Income Items:

W2 forms for the last two years
Most recent pay stubs covering a 30 day period
Federal tax returns (1040’s) for the last two years, if:

you are self-employed
earn regular income from capital gains
earn sizable interest income, etc.
earn more than 25% of your income from commissions or bonuses
own rental property
or are in a career where you are likely to take non-reimbursed business expenses.
Year-to-Date Profit and Loss Statement (for self employed)
Corporate or Partnership tax returns (if you own more than 25% of the business)
Pension Award letter (for retired individuals)
Social Security Award letters (for those on Social Security)

Asset Items :

Bank statements for previous two months (sometimes three) on all accounts. All pages, even if you don't think them important.
Statements for two months on all stocks, mutual funds, bonds, etc.
Copy of latest 401K statement (or other retirement assets because they can count as reserves)
Explanations for any large deposits and source of those funds
Copy of HUD1 Settlement Statement on recent sales of homes
Copy of Estimated HUD1 Settlement Statement if a previous home is for sale, but not yet closed
Gift letter (if some of the funds come as a gift from a family member - the lender will supply a blank form)
Gifts can also require:

Verification of donor’s ability to make the gift (bank statement)
Copy of the check used to make the gift
Copy of the deposit receipt showing the funds deposited into bank account or escrow
Note: many get their statements of various kinds over the internet and these are not always acceptable to lenders, especially when the printed version does not contain the borrower's name, account number, and the name of the institution.

Credit Items:

Landlord’s name, address, and phone number (if you rent - for verification of rental)
Explanations for any of the following items which may appear on your credit report:
Late payments
Credit inquiries in the last 90 days
Charge-offs
Collections
Judgments
Liens
Copy of bankruptcy papers if you have filed bankruptcy within the last seven years

Other:

Copy of purchase agreement (if you have already made an offer)
To document receipt of child support (if you desire to show it as income)
Copy of Divorce Settlement (to show the amount)
Copies of twelve months canceled checks to document actual receipt of funds

FHA Loans:

Copy of Social Security Card (or other documentation of social security number)
Copy of Driver’s license

VA Loans:

Copy of DD214

Refinances:

Copy of your most recent monthly mortgage bill
The following cannot hurt to have ready, but are not as necessary as they once were:
Copy of Note on existing loan
Copy of HUD1 Settlement Statement on existing loan
2000 by Terry Light and RealEstate ABC, modified 2002

What about my FICO (credit) score?
FICO actually stands for Fair Isaac and Company, which is the company used by the Experian (formerly TRW) credit bureau to calculate credit scores. Trans-Union and Equifax are two other credit bureaus who also provide credit scores. In short, lower credit scores require a more thorough review than higher scores. Often, mortgage lenders will not even consider a score below 600. Some of the things that affect your FICO score are:

Delinquencies
Too many accounts opened within the last twelve months
Short credit history
Balances on revolving credit are near the maximum limits
Public records, such as tax liens, judgments, or bankruptcies
No recent credit card balances
Too many recent credit inquiries
Too few revolving accounts
Too many revolving accounts
2000 by Terry Light and RealEstate ABC

What if my credit score is too low?
Mortgage lenders generally check with three credit bureaus in order to evaluate your past payment history. Your goal in cleaning up your credit report should be to clean up each of the three bureaus. If you only work on one, this does not effect the reporting to the other bureaus. Get A Copy of Your Credit Report
The first step is to get a copy of your merged credit report, which shows all three of the major bureaus, Experian (formerly TRW), Equifax (formerly CBI), and Trans-Union. Most mortgage lenders will obtain data from all three of these bureaus in analyzing your credit history.
What to Say When You Call Your Creditors
There are two efforts that must be made. First, call any creditors reporting a negative and ask them to remove the negative item. Ask in a nice calm voice and do not get upset when they say no. Simply repeat your request over and over in your nice pleasant voice. If you get nowhere, then ask to speak to the supervisor. Make sure you keep a log of your conversation, noting the date, time, who you spoke to and what they said. Repeat this procedure over and over. In a high percentage of cases, it works. Get Written Confirmation of Agreements
Be sure to ask for a letter by mail or fax that shows the creditor is correcting the negative information. You may need this letter for two reasons. First, they may not actually make the changes. With the letter, you can appeal directly to the credit bureau and they will make the correction. Second, if you are applying for a mortgage before the changes actually hit the credit bureau’s report, your lender will need this documentation. If you have a charge off or collection account that shows as unpaid, don’t just send them a check and pay it off. Call the creditor on the phone, explain that you have the funds to pay the account in full, and calmly explain why it should not have been reported on your credit in the first place. Then ask if they will provide you a letter deleting the account entirely from all credit bureaus if you pay off the account. Try to get them to fax it to you. As before, be sure to document all of your telephone contact and always keep a nice pleasant tone in your voice. In a large percentage of cases, this also works. Disputing the Report -- When Your Creditor Will Not Remove an Item
There will be cases when the creditor does not agree to remove the negative credit item. If it is an item that is definitely not yours, call the credit bureau immediately (except for Equifax, who only responds by mail). When on the telephone, do not discuss any negative items that are accurate. Do not discuss any items that may be accurate in general but have some small error in detail that you can dispute by mail. Once you confirm any accuracy at all, you cannot dispute it later by mail.

For the remaining items, you need to dispute them by mail, writing directly to the credit bureaus. Write a letter to the appropriate bureau including your name, social security number, address, disputed accounts, and account numbers. You must sign the letter. Inform the bureau that you are disputing the data as it appears on your credit report.

Real Property Mortgage and Investments - 9269 Utica Ave. Ste. 145 - Rancho Cucamonga, CA 91730
Office Phone: (909) 476-6012

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