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Applying for a Home Loan in Texas

Items Needed To Apply for a Home Loan

10commandments_loanApplying for a home loan these days is not for the “weak at heart”! It is a pain-in-the-neck process no matter how much money you have or which lender you choose. So mentally prepare yourself for a hassle, and you won’t be disappointed. ;-D

NOTE: Read The Perfect Loan File on Forbes for details.

There is a lot of paperwork required in order to obtain a home loan. Plus, you will have to provide much of the paperwork multiple times throughout the loan process because of new lending standards (Dodd-Frank Wall Street Reform and Consumer Protection Act legislation and the Patriot Act).

Lenders are now required to verify certain items several times through the process…so please don’t get offended or frustrated when they ask you for something that you have already provided them.

 

 

Here’s what you will probably need to apply for a home loan (aka, mortgage):

  1. Proof of identity for borrowers including driver’s license and Social Security number.
  2. Address history for three years.
  3. Copy of tax returns for past 2 years.
  4. Banks names and numbers for all checking and savings accounts.
  5. Bank statements for the past 3 months.
  6. Documentation of all income including pay stubs for past 2 months.
  7. Proof of bonuses for 2 years if applicable.
  8. W-2 forms showing income for past 2 years.
  9. Job history for past 2 years.
  10. Net worth sheet with list of all assets and liabilities including account numbers.
  11. Most recent 401K statements and other retirement accounts.
  12. Copy of gift letter if applicable.
  13. If self-employed, copy of balance sheet.
  14. Divorce decrees if divorced in the past 2 years.
  15. Proof of residency, if applicable.
  16. College transcript if you were a student in the past 2 years.
  17. Bankruptcy discharge papers, if applicable.

 

What Not To Do

Maybe you’ve just gotten married. Maybe you got a raise … or maybe you’re just plain sick of renting. Whatever the case, you’ve decided that it’s time to buy a house. You’ll be given all kinds of advice and pointers about what you should do and how you should do it, but there are things you shouldn’t do that are equally important.

Don’t be deceptive or dishonest when you’re filling out your loan application. Even if you get away with fudging the numbers a little to secure a higher loan (which is loan fraud), what’s the payoff you’re looking for? A monthly payment that you can’t truly afford?

Avoid moving your money around. To eliminate potential fraud and provide a degree of quality control, a lender will review the source of funds for your down payment and closing costs. Most likely, you will be asked to provide recent statements for any of your liquid assets. This includes checking accounts, savings accounts, money market funds, certificates of deposit, stocks, mutual funds, and even your 401K and retirement accounts. If you have been moving money between accounts during that time, there may be large deposits and withdrawals in some of them, which could make it more difficult for the lender to document properly.

Once you’ve been approved for a certain amount, resist the temptation to make any big purchases that could affect your ability to service the loan. Examples might be a new car, a boat, or expensive furnishings.

Sure you may be able to afford the mortgage and a car payment, but what if an unexpected expense comes along that causes your monthly budget to become unbalanced—you’ve got a shiny new car, but you may have trouble affording that and gasoline, and the mortgage, and the utilities. You’re caught in a situation where you’ve over-extended yourself. Even if you’re able to make it work on a month-to-month basis, you may have trouble putting money to your savings account.

Sometimes, knowing what not to do is just as important as knowing what to do.

 

Big Bank vs. Local Lender

At the risk of offending anyone who works for a big bank…
 
Many people think that using their current “big bank” as the mortgage lender will speed up the process because “everything is in one place.” That is not true; it is a myth. My understanding is that all lenders have access to the same databases and such. I have been told that using your bank will not change the process or make it easier.
 
A “big bank” is Chase, Bank of America, Wells Fargo, etc. They may be great banks but, that doesn’t necessarily mean they are great mortgage lenders.
Please understand that you can use whichever lender you want. I highly recommend that you shop around and talk to multiple local lenders and your local credit union (if you have one). Always keep in mind that, to a big bank, you are only one customer in a million. They don’t really have to care that much about you, because you won’t really impact their business. In contrast, to a small, local lender or credit union, you are one in a hundred (or thousand), and very important to their business. Plus, local lenders know the local laws and procedures. Big national banks don’t necessarily know how things work in Texas. 
 
Another thing is experience. I highly recommend that you use a very experienced loan officer (aka, lender), which you can get at a local mortgage company. At a big bank, you may end up with a very inexperienced loan officer, in another state, who makes the process challenging, because he/she doesn’t know what they’re doing.
 
Check your loan officer at https://www.nmlsconsumeraccess.org.
Plus, real estate agents don’t like big banks as lenders, because of delayed Closings. In a multi-offer situation, if you have a big bank as your lender, and another buyer has a local lender, the seller’s agent may highly recommend the other buyer. I’ve had listing agents tell me they won’t accept an offer from a buyer using a big bank! (This has happened multiple times.) So always remember that the lender you use, is part of your competitive advantage.
 
When you have deadlines to meet, and your movers are scheduled to pick up your belongings, and you will have no place to live if you don’t Close on time, then the stress of a delayed Closing is very real. Big banks are notorious for delayed Closings. If you miss your Closing date, you could lose your 1% earnest money, but there are no consequences for the lender.
 
I’ve had several clients over the years, who didn’t listen to me, used their big bank, and had horrible experiences. I’ve had multiple clients call me crying, the week before Closing, due to all the issues with their big bank lender and a delayed Closing. I had a horrible experience once, when a Wells Fargo loan officer demanded that my client leave her mother’s deathbed to perform a task, and the bank STILL didn’t Close the deal…and my client’s mother died while she was away. (I closed my Wells Fargo account over that! Absolutely horrible experience.) Unfortunately, there’s nothing that I can do to help, the week before Closing, if you used a big bank lender. So I try to warn my clients in advance, to try to prevent these sad and stressful scenarios.
 
To be fair, I have seen a handful of deals, with big bank lenders, that went very well. However, several of them were for employees of the bank…who had the inside advantage.

Lenders to Consider

Lenders (loan officers) that my clients have used in the past:

Will Swallen​
Bay Equity
713.558.0364
www.LoanWithWill.com

 

David Krichmar
DaveYourMortgageGuy.com
832-689-6012

 

Deesh Nair
Motto Mortgage
Deesh.Nair@mottomortgage.com
914-844-7797