Understanding mortgage underwriting requests
In our on-going effort to help you better understand the mortgage process, we offer information about mortgage underwriting requests. When you begin the process of applying for a mortgage, you gather a colossal amount of paperwork all in an effort to answer an underwriter’s questions before they are asked.
Your loan processor and mortgage professional are trained to identify questionable areas of a loan and will typically provide a list of needed documents prior to submitting your loan to an underwriter. While your mortgage professional and loan processor will do their best to submit a complete file, an underwriter may still have questions and/or require additional documentation.
Documents needed for mortgage underwriting
- Evidence of earnest money
- Borrower letter of explanation (LOX)
- Gift letter
- Copy of note
- Source large deposits
- Verification of employment
- Fully executed sales contract
Evidence of Earnest Money
Copies of your cancelled earnest money check(s) or proof of wire.
Borrower Letter of Explanation (LOX)
There are a variety of reasons you will need to write a letter explaining a particular event or situation. Typically the events or situations which trigger the need for an LOX are: job gaps, credit inquiries, large deposits into your bank account or less than two year work history due to schooling.
Gift Letter
The requirements for gifts differ between FHA and conventional financing. Just know if you are receiving a gift for a down payment you will need to provide, at least, a copy of the gift check or wire and a gift letter from your donor.
Copy of Note
You will typically be asked for a copy of your “Note” for your second mortgage. Your “Note” outlines the terms of your loan and your promise to repay.
Source Large Deposits
Any deposits into your account over $500 will be questioned so be prepared to disclose the source of each deposit. The reason for this explanation? The underwriter needs to ensure you have not taken on additional debt which would impact your DTI.
Verification of Employment
A Verification of Employment (VOE) will be sent to your employer and will need to be filled-out by your human resources representative. The VOE outlines your dates of employment, a break-down of your income for the past three years and the probability of your continued employment. Additionally, just a day or two prior to closing, a closing agent will call your employer and confirm you are still gainfully employed.
Fully Executed Sales Contract
A copy of the purchase contract signed by all parties involved should be provided. Your real estate agent will typically send this to your mortgage professional; however, feel free to forward your copy.
While there are many other conditions an underwriter may request it is impossible to list them all – basically, your financial life is different than your neighbors.
Finally, it’s important to know, you’ll submit most of these documents prior to the underwriter reviewing your file – this is a sign of an organized, knowledgeable loan processor and mortgage professional.