Step One – Read The Story
Just like any building process the first step is key in succeeding in the rest of the steps. Understanding what program you are “building” for the borrower, and what rules are in place with that program will guide you in getting the loan right.
An example that comes to mind is building furniture from IKEA, when you look at the front of the instructions it shows you a picture of what you are building. This step creates that same picture in your mind for example you read the 1003 and find “The borrower is renting, works a salary job for the last ten years, and is putting a down payment of 5%”. As your reading through the loan and see commission on the paystub, or an open mortgage, these “issues” now stand out as a problem. When you have a picture of what you are building when parts or pieces don’t fit or are missing from that picture it makes them MUCH easier to get to that final product and not miss anything!
How to read the story from the application
When a loan is submitted you will receive some key documents to help you with this first step. These documents are the mortgage application commonly referred to as the 1003, the transmittal summary (form 1008), the AUS findings (DU/LP/FHA Scorecard), and also a submission sheet to provide details on what program the borrower is requesting.
First thigs first, read those key application documents and get these key points of information
- Loan type (Conventional / FHA / VA)
- Loan program (Fixed / ARM / HARP)
- Loan purpose (Purchase / Refinance)
- Loan parameters (LTV / Type of mortgage insurance / Which investor)
After you have the “shell” or parameters of the loan now let’s read about the borrower(s) from the 1003, here are some common questions to ask while reviewing the application.
- How many borrowers
- Are the borrowers renters or owners
- Self Employed / Employed / Multiple jobs
- Source of assets for reserves / closing
- Amount of money required to close
- Are the borrowers paying anything off
- Declarations section (judgments / bankruptcy / citizenship)
- Is the borrower responsible for paying alimony or child support