Get Ready to Make Your Mortgage Application as Paperless as Possible
By Doug Goelz, Mortgage Services
The mortgage industry is far from leading edge when it comes to electronic processing, but it is possible to avoid paper in many steps of the loan process. Here is what you can do to reduce the amount of paper involved in your loan application:
- Use your company’s online HR services to get electronic copies of paystubs and W2s. If you still get paper paystubs and W2s, scan them so you can send them to your lender electronically.
- Use online banking at all your financial institutions to get your bank statements electronically. If you still get bank statements only on paper, scan them so you can send them to your lender electronically.
- Have digital versions of your federal income tax returns with all attachments and notes (no need to send the state returns).
- If your loan amount is $636,150 or less, you may be able to give your lender direct online access to your bank statements and income information. There are several online security steps that you must go through with your lender to provide access to your information. Plus, in order for the lender to get your income information directly, your employer must utilize The Work Number, an outsourcing company that provides employment and income verification services to large corporations. In order for your lender to get your asset information directly, you must have access to online statements from your bank.
- Electronically sign your loan application and most disclosures. In order to sign the documents electronically, your lender must send the documents to you in a format supporting electronic signatures (e.g., DocuSign).
- If you are renting now, but buying a house, have digital images of your rent checks for the past 12 months. You should be able to get digital images of your rent checks as part of your online banking services. If you pay your rent with electronic payments, see if you can create a report through your online banking service to show the amount, payee, and date cashed of your rent payments for the past 12 months. If you only have the deposited paper checks, scan them and provide to your lender.
- For other documents, (such as insurance declaration pages and student loan documents), see if the service provider (such as your insurance agent) can send them to you in electronic format, or if the company has online servicing where you can get key documents. State Farm, as one example, provides all premium, policy, and declaration page information online if a customer has signed up for their online servicing.
- Have access to a good scanner because you never know when the lender will ask for some document that is not in electronic format.
- Ask your lender at the beginning of the loan process how you can avoid as much paper as possible, and ask about using a secure documentation exchange service (such as DropBox) as a way of sending documents with sensitive information.
No matter how hard you try to go paperless, some paper is still required in the mortgage process. For example, all loans require an IRS form that the IRS requires you to hand sign (with a pen!). There also is a standard Social Security Administration that must be hand signed. And finally, when your loan is approved and the loan documents are ready, you will have to hand sign them all.
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