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  • Writer's picturepurpletreerealty

My Lender is Asking for More Paper Work!

So Much Paperwork

Are you ready to get pre-approved to buy your own home? Don’t be surprised by all the paperwork the bank will require for a mortgage loan application when buying a home today. It seems that the bank needs to know everything about us and requires several separate sources to validate each and every entry on the application form.

Many people that are re-entering the market to purchase another home can remember that the loan process was a hundred times easier ten to twenty years ago. But there are two very good reasons that the loan process is much more stringent for today’s buyer than perhaps any time in history:

1.The government has set new guidelines that now demand that the bank prove beyond any doubt that you are indeed capable of paying the mortgage.

During the run-up in the housing market, many people ‘qualified’ for mortgages that they could never pay back. This led to millions of families losing their homes. The government

wants to make sure this can’t happen again.

2.Banks don’t want to be in the real estate business.

Over the last seven years, banks were forced to take on the responsibility of liquidating millions of foreclosures and also negotiating another million short sales. Just like the government, they don’t want more foreclosures. For that reason, they need to double (maybe even triple) check everything on the application.

The Good News

The housing crash that mandated that banks be extremely strict on paperwork requirements also allow you to get a mortgage interest rate around 4%.

People that bought homes ten or twenty years ago experienced a simpler mortgage application process but also paid a higher interest rate (the average 30 year fixed rate mortgage was 8.12% in the 1990’s and 6.29% in the 2000’s)


Embrace The Requirements

Instead of fretting over the additional paperwork required, we need to be thankful that we are able to buy a home at historically low rates, and that the process helps to prove we are really ready to take on the responsibility of a home mortgage.

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