Step 7. Loan Approval

Loan Approval It take about 2-3 days for the lender underwriter to review loan application and your financial documents and provide conditional loan approval. Keep in mind this is only initial approval and does not mean lender is ready to give you loan. Lender will fund the loan or give you loan only you met all conditions. underwriter is a person assigned by the lender whose job is to review you loan application, review desktop underwriting findings, ask for any missing document, review appraisal and see if you qualify for the mortgage and if you meet the guidelines / requirement set up by the Fannie/Freddie government agencies. This process if very straight forward and unbiased. Underwriter may ask for further explanation on your taxes, income, pay stubs, VOE, CPA letter, Insurance policies, Solar lease agreement, lease and bank deposits. My loan processor will assist you with the conditions. You will provide all documents to the loan processor. After reviewing the conditions, loan processor will upload those documents to the lender.

Bank Statement Please provide the most recent two months asset statement(s) from any of the following accounts: checking, savings, money market and stocks, bonds, mutual funds and retirement. Please note the following: Bank statements should include your name, bank name and account number. Include all numbered pages - even blank pages. Statements must show a beginning and ending balance. Online statements must contain the bank's valid website address. If you receive quarterly statements, provide your most recent quarterly statement.

GIFT from family: For FHA loan, lender need donor’s 1-month bank statement. For Conventional loan, lender don’t need donor bank statement. Ask donor to wire the funds (for down payment or EMD) to title company. Ask my loan processor, realtor, or escrow officer for Wiring instructions for title company. You can get 100% of your down payment as GIFT from family members. The annual gift tax exclusion is $15,000 per person and there is no limit on how many family members can give you gift.

Down payment Wiring to title company is the best way to transfer money. All large deposits in your checking and saving accounts need to have paper trail. Lender would not accept any cash deposits. Cash deposits must be excluded from your total balance. Lender will use only those deposit for whom you will provide paper trail such as cancel copies of checks. Lender ask for only current 2-month bank statements. So, if you have cash deposited 2 month ago from the date of application, lender won’t need the paper trail of the cash deposits. Cash deposit seasoned for 2 months are ok.

VOE – Verification of Employment. Lender will order written VOE from your employer. Please give heads-up to you supervisor / hiring manager so this verification can be complete in 1-2 days. VOE is ordered so lender can figure out your total income by evaluation the regular hours and over time over last 2 years. Lender will need VOE for all past employers if you work less than 2 year with current employer.

Work number – Several private employers including state government using work number for VOE. Please get “Salary key” from your employer. A Salary Key is a single-use, six-digit code that you can provide to a verifier (lender) as consent to access your income information.

Pay off debts/liabilities – To qualify you for the mortgage and bring your total debt under 50% of your gross income, lender may require to pay some of your liabilities (credit card, car loan) at closing. We will notify which liabilities to be paid off. Provide the statement for those credit card/car loan and plan the extra funds to bring at closing.

CPA/Accountant letter – Lender need a letter from your accountant or CPA to certify that you have been self-employed for 2 years, have 100% ownership in the business and can use the funds from the business account without any adverse effect on the business. We have a template for the letter.

Home and Flood Insurance: Lender required hazard insurance so your investment can be saved in case of a natural disaster. Flood insurance is required in the area where FEMA have identified as flood area. You can shop around for homes insurance same way you did for car insurance. Feel free to contact Mona Verma, Ph.D. Insurance and Financial Services Agent, Lic.# 0E60926, 2600 E. Bidwell St., Suite 250, Folsom, CA 95630, Ph.: 916-221-3400 / 916-673-3152. Emphasis your insurance agent to work with my loan processor and provide the policies with correct loss payee mortgage clause, loan number, coverage, annual premium and outstanding balance ASAP.

Solar Panels- If property has a solar system, for which there is a recorded Contract and UCC Financing Statement. You need to inform us about solar panel when completing loan application. This will need to be transferred over to the buyer, for which there is a process:

Step Process Responsible
1 Seller will need to notify solar company of the SALE Seller agent and seller
2 Buyer will need to complete a transfer application online Buyer agent and buyer
3 Solar company will prepare new solar contract for buyer to e-sign Solar Company
4 Once the above items are completed, title will request the necessary recording documents (subordination) from the solar company, in order to close. Title Company

Rental Lease – If you are buying home as investment, then you must obtain lease / rental agreement signed by the tenant. Lender will need lease to calculate the rental income so they can see how much the cash flow is (75% x of the monthly rent – (PITI principal, interest, tax, and insurance) = Cash flow).