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Profile picture for hrmanager

When and how often do I need to provide income statements during the loan process?

We just started looking around at houses. I have some pre-approvals from two loan companies based on current income statements and 2008 W2's that I provided them last week.  My problem is, that like a lot of companies now, everyone is being required to take time off unpaid this quarter. It's adds up to about 1-2 days of unpaid time per pay period, so my paychecks are about 20% less for awhile (basically until business picks up.) I do have some control as to when I actually take the unpaid days...so I am hoping to take them during a time period that won't affect my loan approval. So when I find a house, do I need to provide current income statements at that time to the lender (even though I already rec'd a pre-approval from earlier income statements?) And if so, what period's worth do I need to submit at that time (they requested 1 month of statements from me during the pre-approval process.)

Thank you!

  • April 21 2009 - Tualatin
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Answers (10)

HM,

If you go forward with one of the lenders that already has these documents you should not be required to furnish them again. Although, during the underwriting process and usually prior to funding your employer will be contacted to verify employment and possibly income. ... Good luck, Rudi
  • April 21 2009
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If you are a W-2 earner, most lenders will require you to furnish 2 months recent bank statements (based on the date the loan application was submitted), a 30 day pay stub reflecting no gaps within the subject pay period, along with 2 years W-2's.  Do not be concerned if your pay stubs reflect decreased pay due to declining work hours for specific periods of time as most lenders should be able to take your YTD W-2 wages over 12 months to determine your income qualifications.  I'd double check with a mortgage professional in your area as lenders in various states have different underwriting guidelines with regards to income and credit qualifications.  All lenders issuing conforming or government products must adhere to Fannie/Freddie/Ginnie DU/LP automated underwriting guidelines; however, each lender must also adhere to the Servicer's (puchasing investor) guidelines in order to insure that the loan can be sold on the secondary market. 
  • April 21 2009
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Profile picture for Jon Petersen
If you arent making as much as you were, you cant afford what you could have prior. Are you sure you want to push your limits when a lot more foreclosures are about to hit the market and push prices lower?
  What if you get laid off? Doesnt sound like a good idea to lead the bank to believe a different story than the truth.
  • April 21 2009
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You're not misleading the bank in any way?  We live in a "full doc" world where you cannot hide anything from the banks/lenders.  If you make less than you did before, so what?  If your DTI ratios, income and credit rating are still at the lender's qualifying levels, than who are we to say that you should not be buying a home? The reality is that there are A LOT of factors that lead into this economic and real estate decline; however, the only way to get out of this mess is for qualified buyers to get off the fence and get out there and help deplete the mountain of inventory that is still growing. Plus, with the leverage that buyers now have to negotiate down prices along with the record low interest rates, sprinkled with a little Gov't tax incentive for 1st time homebuyers to the tune of 8k, there is truly no better time than now to buy.  I would speak with a qualified mortgage professional in your area to see what your options are.  If everybody continues to listen to the media and people like titan10, than we'll be in this housing trainwreck for the next 10 years.
  • April 21 2009
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Pre-approval is generated by the underwriting system based on the information you have provided. Underwriter still needs to verfiy the information you provided are accurate. If you are a wage earner, meaning having W2's, most lenders require you to provide them with 2yrs of W2's along with a recent paystub, sometimes 1 month vary by lender. IIf you are self-employed, you need to show 2yrs tax returns along with k-1 business profit&losses. Also showing your assets by providing bank statement, 401k statement, investments accounts, etc.... You need to provide all the required documents at a conditional approval stage, where the underwriter outline all the required conditions needed in order to proceed the loan to closing.
  • April 21 2009
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I think you got some great advice so far, and I just would like to add 2 cents. If this is a temporary situation, I think you are fine, just pick your days after you close. However, in this lending environment, and this may be a permanent situation, or you must take some of the days prior to closing, disclose this with your lenders, and through them, to the underwriters. Mortgage Fraud reviews are looking over each loan now like never before. Why expose yourself to that potential. Be as honest and as forthright as you can on any mortgage application, as the truth is what it is. I hope that helps! Jim
  • April 21 2009
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Profile picture for Jon Petersen
 If everybody continues to listen to the media and people like titan10, than we'll be in this housing trainwreck for the next 10 years.

If everyone listened to people like Mike, our economy would be worse than it is. If you wont make the money you show to the bank on your current w-2's, it is decieving the bank. If your dti is still at an acceptable level, it doesnt matter if it is lower or not. 

Mike, if the house isnt affordable with his reduced hours, it will come back on the market as a foreclosure, but the mortgage broker like you will still have their money. You attack me becasue people like me expose you for the con artist you are. You think your job is to get the person in the house no matter what, to give them what they want, so you can make your money. 

How many subprime stated income option arms did you push through knowing that the borrower could barely afford the teaser payment, let alone the ballon payment. Better yet, what percentage of your clients lost their house, or will lose their house. I thought this market pulled all you fraudulent brokers into bk, but I guess there are some of you left. I guess the market has some more work to do.
  • April 22 2009
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Profile picture for Jon Petersen
however, the only way to get out of this mess is for qualified buyers to get off the fence and get out there and help deplete the mountain of inventory that is still growing.

Key word...qualified. If his days off now make him unqualified, he is no longer qualified.

The longer buyers stay on the fence, the faster the prices will fall, and help us get out of this mess quicker with affordable housing. youve got it backwards dumb ass.
  • April 22 2009
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Generaly speaking, Lenders want to see the prior years W-2 and 30 days pay stubs. Often they will want more, including the tax returns.
If your income flucuates, most lenders will look at the prior 12 months to 24 months and average it out. It's all up to how your broker packages it and how the lender looks at it.
  • May 12 2009
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In order for me to supply a preapproval letter, I require bank statements, 401k statements, paystubs, etc at the time of application so that I can confirm everything prior to signing my name on that preapproval letter.  I also have a disclaimer on my preapp letters that the preapproval letter is subject to change as income may be verified again prior to closing. Actually I request it upfront with the loan app for refi's also.  Makes the process easier and quicker when I can just upload it all to the lender.
  • May 12 2009
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