Documentation to Initial Underwriting
Whether you are either 1) shopping for a home or 2) ready to proceed with a refinance of your existing mortgage, we will want to have complete confirmation proving the existence of your income with some supporting documentation.
I mentioned earlier that we are looking for “documentable” income, and the adjective “documentable” is key here, as mortgage approvals are based only upon what can be proved on paper. This proof must be on the same level as what is submitted to the IRS. Generally for normal salaried/wage earner/borrowers the W2 and paystub is completely sufficient to prove income. But for self-employed, the full tax returns are important. We can only give you credit for your adjusted AFTER EXPENSES income. A profit and loss statement, or a 1099 is not admissible for the purposes of loan approval. Only filed personal income tax returns will do (for the self-employed).
So once the proof of income is established, we submit the file to processing where it is prepared for underwriting. The processor will organize the file in such a way that makes the underwriting decision as quick and easy as is possible.
The main job of the Loan Officer is to initiate the conversation with a potential borrower, and to educate and advise that borrower about the costs and benefits of their different options. The job of the processor is to execute whatever plan has been agreed upon. The underwriter is the judge and the jury for your loan approval. Once a loan plan has been developed by the Loan Officer and Borrower, the Processor commonly becomes the main point of contact from here until loan closing.
The underwriter makes sure that all the loan guidelines are appropriately met, and at this point in the process will create a list specific to this borrower of additional documentation needed to create a complete and fundable file.
Once we have this list the borrower is now “conditionally approved”. So this means the underwriter has seen the file and it so far fits within guidelines, but more documentation is still needed.