Friday, July 24, 2015

Refinancing? 3 Mortgages That Require Less Documentation

Looking to avoid all the paperwork associated with getting a mortgage? Here are three loan programs with no laundry list. See if you’re eligible…

Most mortgage loan products require you to provide two years of tax returns and W-2s, 30 days of pay stubs and at least two months of bank statements to provide a basis demonstrating your ability to repay the note. If you’re buying a home, there’s no back step, you will be subject to the scrutiny of the bank’s underwriter.

If you are looking to reduce your fixed housing costs here’s three programs that could meet you in the middle of the road. After all, who wants to go through a financial analysis every time you want to save a few hundred dollars per month?

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If your loan is owned by Fannie Mae or Freddie Mac, and it was taken out no later than May 31, 2009 you’re gold. The role of the Making Homes Affordable Programwas to aid homeowners in refinancing due to loan-to-value restrictions, do so without limitation. The program still has the same flexible appraisal threshold. Each mortgage company offering the program must perform an automated underwriting analysis on your loan application. Automated underwriting is the nationwide algorithm lenders use in originating loans sold to Fannie Mae and Freddie Mac. The automated underwriting results determine a loan that is eligible for sale delivery to either entity. If the automated underwriting results reveal your loan does not require an appraisal, you need not obtain one. Additionally, even if you have a debt to income ratio as high as 60%, this may also fly with your mortgage company.

Mortgage tip: some mortgage companies have debt related adjustors built into their origination guidelines, meaning that even though the program does not have a debt to income ratio requirement, you might still be limited to 45% and it may mean having to request an exception for approval.

Additionally, if automated underwriting only requires pay stubs and for example one year of federal income tax returns, you need only that information in conjunction with your mortgage loan application. This may be acceptable with the mortgage company who we were working with to provide documentation specifically consistent with the automated underwriting results.

The same credit characteristics might apply as identified above, your mortgage company may still require full documentation. For the loan to be considered eligible for delivery to Fannie Mae and Freddie Mac, the only documentation that is required is specifically identified on the automated underwriting result your loan officer has access to. If your mortgage company is still asking you for more financial documentation, ask them to provide a copy of the Desktop Underwriter (Du) Fannie Mae’s algorithm or Loan Prospector (LP) Freddie Mac’s algorithm results on your application.

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