- Why Underwriters Need More Documents for Your Mortgage?
- Why Couldn’t They Just Ask for Everything Upfront?
- How Can You Help Streamline the Process?
- What Happens If You Can’t Provide the Requested Documents?
- How Long Does the Underwriting Process Take?
- What If Your Mortgage Application Is Declined?
- The Bottom Line
Mortgage Underwriter Asking for More Documents? Here’s Why
You’ve found your dream home, submitted your mortgage application. And now you’re waiting, tapping your toes… but the underwriter keeps asking for more paperwork.
Relax, this is normal. There are perfectly valid reasons behind it.
The underwriter, like a financial detective, needs to be sure you can handle the mortgage comfortably. They’re after your income, debts, savings, credit score – the whole lot. They want to make sure you’re a good fit for the loan.
So why all the extra documents? Everyone’s situation is different, and sometimes the underwriter might find something that needs a bit more explaining.
Maybe there’s a gap in your employment history or something unusual in your bank statements. They just want to clear things up before giving you the thumbs-up.
In this article, we’ll break down the usual reasons underwriters ask for more documents, what kind of bits they might need, and how you can be ready to hand them over quickly.
Knowing this can help you stay calm and keep things moving smoothly towards getting your mortgage approved.
Why Underwriters Need More Documents for Your Mortgage?
When you apply for a mortgage, you’ll submit various documents like payslips, bank statements, and IDs.
But underwriters aren’t just checking these basics – they need the full picture of your finances.
Here’s what they’re looking for and why they might request more documents:
- Credit Check. They’ll scan your credit report for late payments, defaults, or other issues. Even if you explain to them, they might ask for extra documents to understand the situation and assess the risk of lending to you.
- Income Check. If your income varies or comes from multiple sources, they’ll want additional payslips or tax returns. This ensures your income is steady and enough to afford the mortgage repayments.
- Employment Gaps. Gaps in your work history need explaining. They might ask for documents showing why there were gaps and how you managed financially during that time.
- Unusual Bank Activity. Big deposits or withdrawals raise questions. They’ll want proof explaining these transactions to make sure they’re legitimate and don’t pose a risk to your ability to repay the loan.
- Financial Stability. They’re checking for any risks that could affect your ability to repay, like frequent gambling transactions. They might ask for explanations and proof that such habits won’t hinder your repayment capacity.
- Self-Employed. They’ll need extra documents like business accounts, tax returns, and future income projections. This helps them confirm your income is stable and likely to continue.
Why Couldn’t They Just Ask for Everything Upfront?
It might seem easier if underwriters just asked for all your documents upfront.
But here’s the thing: they can’t predict every question that might pop up as they review your application.
Every mortgage application is unique, and new questions often arise as they delve deeper into your finances.
For example, let’s say your payslips show an unexpectedly high income one month. The underwriter will want to know if it’s a one-off bonus or a permanent raise, as this affects their assessment of your long-term affordability.
Similarly, if you have employment gaps or past financial difficulties, they’ll need extra documents to understand the situation and how you recovered.
So, underwriters can’t ask for everything upfront because they don’t know what extra details they’ll need until they see your initial documents.
This thorough review protects both you and the lender by making sure the mortgage is a good financial decision for everyone.
How Can You Help Streamline the Process?
While it’s frustrating to receive multiple requests for documents, there are steps you can take to help streamline the process:
- Be Responsive – Respond to the underwriter’s requests straightaway and get them the documents they need ASAP. Delays from you can really slow things down
- Be Transparent – Don’t try to hide or downplay any financial issues or irregularities. The underwriter will find them out anyway, and being transparent from the start builds trust and avoids delays.
- Provide Clear Explanations – If they ask for clarification on anything, provide detailed written explanations alongside the relevant documents. This helps them understand the situation and might avoid extra back-and-forth.
- Use a Mortgage Broker – An experienced mortgage broker can be invaluable. They can anticipate the underwriter’s questions and ensure you have all the necessary documentation ready from the start, reducing delays.
What Happens If You Can’t Provide the Requested Documents?
If you can’t find some of the documents the underwriter asks for, like old bank statements or tax returns, don’t panic. Be honest with them and explain your situation.
There might be other documents you can provide as evidence. The important thing is to talk openly and show you’re willing to help. If the underwriter thinks you’re hiding something or not cooperating, it could hurt your chances of getting the mortgage.
Underwriters assess risk, so if they don’t have a clear picture of your finances, they might not approve your loan.
How Long Does the Underwriting Process Take?
The underwriting process can be frustratingly slow, but there’s a good reason for this.
They need to be meticulous in their review to ensure they’ve covered all bases and properly assessed your ability to afford the mortgage.
Typically, the underwriting stage can take anywhere from a few days to several weeks, depending on the complexity of your case and how promptly you provide the requested documentation.
If you’re working with a mortgage broker, they can often provide insights into the typical timelines for your specific lender and situation, helping you manage your expectations.
It’s important to be patient and understand that rushing the underwriter could lead to oversights or incomplete assessments, which could ultimately delay or even jeopardise your mortgage approval.
What If Your Mortgage Application Is Declined?
Even after providing everything, your mortgage might still be declined. But don’t give up!
The underwriter will explain why they rejected you, so you can improve and try again later. Here are some common reasons:
- Bad credit history or too much debt
- Not earning enough or unstable job
- Missing documents or they couldn’t check some details
- Problems valuing the property
The Bottom Line
If your application is declined, take some time to review the reasons and seek advice from your mortgage broker. They can help you fix any issues and get you approved next time.
Remember, preparation is key to success. If you’re quick to respond, upfront about your finances, and have everything organised, the whole thing will be much smoother and you’ll be more likely to get the mortgage.
Your mortgage broker can be the right help throughout the process, offering advice and support.
For a free, no-obligation consultation with a good mortgage broker, get in touch with us.
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Frequently Asked Questions
Find answers to common questions here.
Is it normal for mortgage lenders to ask for more information?
Yes, mortgage lenders routinely ask for more information during the underwriting process. They do this to get a complete and accurate picture of your finances, as every application is unique. This extra information helps them assess your ability to repay the loan and identify any potential risks.
Do underwriters always ask for more information?
Underwriters won’t necessarily ask for more information if your initial application is clear and shows your financial stability well. However, any missing details or uncertainties will prompt them to request further clarification to confirm your financial situation.
Should I worry about the underwriting process?
There’s no need to worry about the underwriting process as long as you’re prepared. Being organised is key!
Gather all your accurate and complete documents beforehand. If the underwriter needs anything else, be prompt in providing it.
Remember, they just want to confirm you can afford the mortgage. By cooperating and being transparent, you can help ensure a smooth process.
How likely is it to get denied during underwriting?
It’s hard to say for certain how likely denial is during underwriting as it depends on your financial situation.
A strong credit score, steady income, and low debt make approval much more likely. However, red flags like poor credit, tight finances, or missing paperwork can raise your chances of rejection.
To improve your odds, be prepared beforehand and address any potential problems before you apply.
