TSB Money Matters
TSB Money Matters where we dive deep into the dynamic world of banking, finance, and everything in between. We will tackle topics including landscape of financial institutions, economic trends, and the ever-evolving technologies shaping the future of banking.
In each episode, we'll unravel the complexities of financial topics, bringing you insightful interviews with industry experts, thought leaders, and innovators who are at the forefront of the banking industry. Whether you're a seasoned finance professional, a budding entrepreneur, or someone simply curious about the forces shaping your financial world, this podcast is for you.
The TSB Money Matter Podcast is produced by The Savings Bank, a community bank headquartered in Wakefield, Massachusetts. The information presented is for informational purposes and should not be considered financial, legal or tax advice. Consult with a banker or financial advisor about your personal or business finances.
Member FDIC. Member DIF. Equal Housing Lender.
TSB Money Matters
Mastering the Mortgage Maze: Expert Tips for a Seamless Loan Application Experience
Unlock the secrets to a smooth mortgage application process with expert insights from Jeff D'Alessandro and Mario Giamei of the Retail Lending Department at The Savings Bank. Whether you're a W-2 employee or self-employed with diverse income sources, they share the essential documents you need to make your application hassle-free. Our conversation offers vital tips for first-time homebuyers and highlights the nuances of verifying various income streams, ensuring you're well-prepared for your mortgage journey.
Discover why every page of your bank statements, even the blank ones, matters in the loan approval process. Jeff and Mario dive into the significance of asset verification and the role of non-liquid assets like 401k accounts in demonstrating financial stability. We discuss maintaining a transparent financial paper trail, especially when transferring funds, and adhering to exact figures in your financial documentation. This episode equips you with the know-how to avoid common pitfalls and clear your financial situation to lenders.
Explore the world of equity loans and the inclusive options available, even if you're not a current mortgage holder or bank member. Jeff and Mario guide us through the unique aspects of condominium lending and the complexities of properties held in trusts, stressing the importance of legal reviews and bank policies. To round off, they share valuable strategies for streamlining your loan documentation process, emphasizing that simplicity can be your best ally. These expert tips are your key to navigating the loan application process with ease and confidence.
The TSB Money Matter Podcast is produced by The Savings Bank, a community bank headquartered in Wakefield, Massachusetts. The information presented is for informational purposes and should not be considered financial, legal or tax advice. Consult with a banker or financial advisor about your personal or business finances.
Member FDIC. Member DIF. Equal Housing Lender.
Visit us at www.tsbdirect.bank
Welcome to TSB Money Matters, where we dive deep into the dynamic world of banking, finance and everything in between. I'm your host, allie Houghton, and we'll tackle topics including landscape of financial institutions, economic trends and the ever-evolving technologies shaping the future of banking. Today, my guests are Jeff D'Alessandro and Mario Jumet from the Retail Lending Department at the Savings Bank. Thank you both for joining us today. Thank you.
Speaker 2:Thanks for having us Allie.
Speaker 1:And today we're going to be discussing about loan documentation and what people should know about it when they're applying for a mortgage.
Speaker 2:Yeah, so one of the frequently asked questions we get in retail lending is what do I need to pull together to apply for a loan?
Speaker 2:So what we thought we would do today would just go over briefly the loan documentation that we require from a borrower, and there's a few different types of borrowers. We all earn money in different ways. So, for example, you may be a salary W-2 borrower getting a paycheck every week. You may be self-employed, in which case you're looking at a more tax return piece. You may be 1099. So we're going to get into a couple of different types of borrow um and then go over the required documentation, yeah, and if I could add, jeff, none of the documentation we're talking about is needed to apply you just need to apply.
Speaker 3:This is all documentation we request after the fact, correct technically speaking in most cases. If somebody wants us to look at their income because they're not sure beforehand, you know we're glad to to offer assistance, but really we grab. This is information we gather after the application stage, so they don't need to worry that they have to have all these things just to put an application in. True, so what?
Speaker 2:I thought we'd do. Let's, mario, let's go over just a standard salary W-2 borrowers. That means you're, you have an hourly employee or a salaried employee. You get a paycheck and a pay stub every week or biweekly and you get a W-2 at the end of the year.
Speaker 3:Right. So if we're talking about a mortgage refinance, a regular purchase loan or any of our equity products, those borrowers only need two most recent pay stubs. A lot of banks will ask for four or a month's worth. We ask for two. We know, sometimes people are paid weekly, some people are paid biweekly, some people are paid bimonthly, but we only need two pay stubs and they're 22 and 23 W-2s. That's really all we need for a person who just has a regular W-2 wage earner employment typically 40 hours or 37 and a half hours full-time employment Right.
Speaker 2:So two simple pieces of documentation, most recent, two pay stubs and your last two years W-2. So that's for a salary W-2 employee. So let's move on to someone who's self-employed Mario.
Speaker 3:So for someone who's self-employed, it gets a little bit deeper. We need to see their 2022 and 2023 federal tax returns with all pages included in that documentation, not just the main two pages. We need to be able to go through the entire tax return and look at the two-year history. That also applies for people who are W-2 employees who have rental income as well, or any W-2 employee who has part-time, self-employed or some consulting work anything that goes on to a Schedule C on their personal tax return. We're going to require a two-year history of that and in most cases other than rental income, we also need to collect an unaudited P&L for how their business is going in the current year that we're in, because there is no tax return for the current year.
Speaker 2:Yes, I think the key piece too that you mentioned here is looking at the full tax return and people always say well, you have the first page, all the info is there.
Speaker 2:Well, while it is a summary of all the information, what it doesn't contain are things that we can do to maybe add back certain pieces, such as depreciation, things that will help add to income that a borrower may use when they're qualifying for a loan. So it is critical for us to see how that summary of page one and two, how those numbers, got in those places.
Speaker 3:So the entire tax return is necessary and on top of that if a person owns a corporation, an S-corp or a regular 1120 corporation, and they have business tax returns oftentimes well, we always need to see those the S corporation tax return is going to flow over to the personal tax return.
Speaker 3:So, in essence, anybody who has a business of sorts self-employed either a corporation or an S corp or an LLC we will need two years of personal returns and two years of the business tax returns as well. And then we only need that P&L for the business at that point because all that flows over to without getting into the weeds. All that flows over to the personal tax return is kind of the final result of the business tax return. And, as you mentioned, there are some times when folks are going to have to. You know, they're going to be able to have depreciation or things to add back in, and sometimes they have losses that we can actually offset that if we see their paper losses. Sometimes, if it's a year over year paper loss or a one-time loss, we look at them different ways. So there's a lot of important information again not to dive too deeply into that. And then the one last thing I will say too, jeff, is whether or not you're self-employed or a salaried employee.
Speaker 3:If you're doing a first-time homebuyer loan with us, we need the two years of tax returns. That's how we identify that you haven't owned a home in the last three years.
Speaker 3:We do it on a two-year history and the third year is the honor system. But we look at the tax returns. So whenever you're a first-time homebuyer, regardless and you're doing the first-time homebuyer program, we need the tax returns and you're doing the first-time homebuyer program we need the tax returns Right and again, as Mario mentioned, that's to verify that you haven't had homeownership in the last three years.
Speaker 2:One piece that always comes up in these conversations and I know you get this all the time, Mario is, or we get this without even asking for these documents would be the. Massachusetts state tax returns or any state tax return. Yeah, those are not required. Those are for you and we don't ask for those, but we do see them often. So when we're talking about tax returns, as Mario mentioned, we are simply talking about your federal tax returns, right?
Speaker 3:If there's a PDF and they're all together, I would always tell a borrower don't go through the process of taking it apart and printing it out. Just send me the whole thing. We'll peel out the piece that we need to save a borrower the trouble of doing that, because it can be a nightmare. A lot of folks today tell me they don't have printers anymore to do these things. So if you've got it all in one return together, just send it to me. We'll parse out the federal return and we'll destroy the email so we don't have the state return.
Speaker 2:And it's a lot easier to sift through those electronically.
Speaker 3:The other thing too is a lot of times folks will send me the tax returns and anticipate that the W-2s are in the tax returns. Generally speaking, unfortunately they're not. So you should always know that your W-2s are probably going to be separate within your files somewhere, that your tax return is not indicative of your W-2. And again, that's important because a lot of times folks will say well, you have the number on page one. The fact of the matter is a borrower can cheat themselves out of income because the wages that are reported on the tax return are not necessarily your total wages. If you have pre-taxed items removed out of your paycheck every week, those are not going to show up on the tax return. We need the W-2 to see those and get you the most money we can.
Speaker 2:Right, as a lender, our job is to ascertain the most usable income qualifying income that we can for you, Right. So I think quickly to recap. So if you are self-employed, if you have any type of consultant or extraneous income, that is self-employed above and beyond W-2, or if you own rental property and that shows up on a Schedule E on a federal tax return. In those instances, if you derive income from any of those examples, we are looking for those federal tax returns.
Speaker 2:And so again, very critical federal tax returns most recent two years and obviously once you get into that current tax year, as Mario mentioned you would not have anything to verify your documentation other than a profit and loss statement, and here at our bank. We look at an unaudited P&L.
Speaker 3:And that's only for self-employed people, not for rental income purposes, correct.
Speaker 2:Let's talk a little bit about verifying asset for a borrower. We did skip one thing. What is that? The retired person? Okay, well, why don't we talk about?
Speaker 3:that the retired folks, generally speaking, are either on a pension or Social Security or some combination thereof or some type of annuity that they're drawing from, which also is really it has to be as an income stream that they're receiving income monthly from. There are times that people also have required minimum distributions. So, when we're dealing with pensions and Social Security, we need the 2022 and 2023 1099s, which are different from a W-2, because a 1099, basically you're getting all the income and there's no taxes taken out of it and typically you're retired and don't have to pay taxes. So we need to see the 2022, 2023 1099s. We need an updated award letter from social security for the current year to make sure the new income has not gone down, and then we're going to verify that with your bank statements typically. But we just can't use the bank statements because, again, there are things taken out of people's social security, like Medicare and Medicare Part B and those things that have to be taken out. So we want to again maximize the income for people. We want to see the 1099s and the award letter and then we'll verify that the money is received in your bank statements, which we'll be talking about in a minute.
Speaker 3:And then, lastly, there are some folks who get required minimum distributions and those people don't have necessarily, may not have, their 1099. They typically do. But in any event, we're going to need to see that two-year history of collecting the required minimum distribution over a two-year period and we can use that income as well. But we have to see it for a two-year period because it's not money that's automatically coming to you. It's money you take as needed and if you don't take it year over year, we can't necessarily use the income. So there are some pieces there to talk about, and being able to verify that that asset exists so that they continue to collect that money is also important. So if they've exhausted their minimum distribution monies, we can no longer use it in the current year. So just to bring that to a final close, okay.
Speaker 2:And I think the other point too, in mentioning not using things like bank statements to ascertain income. What's critical for our listeners to know here is that we're looking at gross income. Gross monthly income is how we qualify, and whether that's on a salary, w-2 bar or when you get your you know we'd all love to take our gross income home.
Speaker 1:We don't.
Speaker 2:There are dedu. You get your. You know we'd all love to take our gross income home. We don't. There are deductions taxes. You know any type of deduction that you have whether it's for health insurance, there's a number of different things that take away from that gross number. So when we're financing or qualifying a borrower for financing, we're looking at those gross figures.
Speaker 1:Bear in mind, since we do realize you don't take that gross income home.
Speaker 2:there are ratios put into place when we qualify loans that take that into account. So I think we've had a nice overview of required income documentation. I think we can move into assets and talk a little bit about that. Sure, yeah, absolutely.
Speaker 3:I mean again we. I think I hear a lot of customers come to me and expect to give us three or four months of bank statements for a bank account. And again, no matter what loan we're doing, we want to look at your assets because we want part of the process of qualifying is making sure that you do have a propensity to save money. It's part of the process. It's not always necessary, but it's certainly healthy to show that when it's going to especially put the loan in a positive light Sure, especially in a purchase transaction, when we're trying to verify In a purchase transaction it's necessary.
Speaker 3:but even in a refinance or an equity loan, we still want to make sure that we you know, look, if someone's you know going coming to us to borrow money and they might have their credit cards maxed out, we've got to make sure that you know there's ability for them to save some money too. We want to put them in the best position going forward. Sometimes that means they take a little more money out of an equity loan to create a nest egg for themselves, which is a smart thing to do, especially in these times. But we're always looking at two-month bank statements with all pages. It's going to mean the blank pages that say this page intentionally left blank. Those are made for banks, yeah, so you know.
Speaker 2:for us in the industry. One of the things that we deal with very frequently is that there'll be page one of three and we'll get pages one and two and we're going to have to make sure that we're.
Speaker 1:While we all know that there's nothing on that.
Speaker 2:Third page, maybe there's an advertiser.
Speaker 2:Maybe it's intentionally left blank we do need to see all pages just to make sure that there's no additional transactions and so again, it would be most recent two-month bank statements, all pages. We do, as Mario mentioned, for purchase loans, we're looking at those to verify funds to close. For other loans, refinance loans, equity lines. It also is helping you know we're getting a picture of you as a borrower and your propensity to save and your availability of funds is a key to making that you know. Introduction to the bank as to who you are as a borrower.
Speaker 3:Right. Unfortunately, if someone is perennially overdrawn, that can be a strike against them. They're in negative numbers a lot. Again, we owe it to our depositors to make sure that we're making the best loans too.
Speaker 1:We want to take care of everyone.
Speaker 3:We can, but we have to make sure we're making the best loans so that the bank can stay in business for our depositors. We're a savings bank.
Speaker 2:When an underwriter is looking at a loan and they're looking at the overall. You know they're looking at also a positive when you're creating this. This may not be a funds to close issue, but simply having reserves. And what reserves are, is money? And when the transaction is all done, whether it's a refinance transaction or a purchase transaction, when the dust settles after the transaction is done, do you still have a few dollars available to you?
Speaker 2:know how many payments could you make if you had to? So those assets are critical in showing those reserves along with the critical funds to close.
Speaker 3:Right, and sometimes those reserves may not be completely liquid that you can access by making a withdrawal at the bank. It might be a 401k we ask for sometimes for those statements, especially in the purchase world, for reserves. When someone is using most of their money to do a 5% or 10% down payment, for example, and they have to get the PMI insurance, the PMI insurance company requires the reserves.
Speaker 3:So by getting a 401k statement we're not asking anyone to take that money out of the 401k but it lets the PMI insurance company understand that if the borrower needed to in a crisis, they certainly could access that money, because a 401k allows you to borrow or withdraw, sometimes with penalties, sometimes without. Consult your fiduciary experts on that. That's not our area of expertise, but you can access the money in a 401k, oftentimes Some you can't and we have to know the difference in those. That's our job sometimes to know the difference between things that you can access or things like a pension that you cannot access under any circumstance.
Speaker 2:And what I'd like to point out too is so when we're looking at asset, when a customer asks you, mario, say, hey, we're doing a transaction, do I? You know I have bank statements, you know I have a 401k or I have an IRA, do you need those statements? How does that conversation typically go with the borrower?
Speaker 3:So if it's a refinance or an equity loan transaction. Those are ones where you know I may ask for it if they have no savings or checking. Some folks just don't but they might have $300,000 in a 401k account. It's really more critical in the purchase transaction and even, moreover, a lot of times people are taking that money and that's the source of their down payment.
Speaker 3:They're going to draw money out of their 401k money, out of some kind of stock fund and in those situations we need to see the two months of statements and then we also need to see them liquidate those funds and show us documentation from the company be it Fidelity or Morgan Stanley or whoever might be the administrator of that particular fund proof that the money came out, which they can typically do online with a printout that shows the company's name, the borrower's name and the account number, along with the transaction, and we have to see that exact transaction being deposited into their personal account.
Speaker 3:So we need to see the paper trail of the traveling of the money from the start to the finish, and that, again, we always need to see documentation that shows name, account number, at least last four of an account number, and we need to see the transaction going in In the older days, when people were getting manual checks. What we would run into quite often is someone gets a check for $25,387.26, and they deposit $25,000 and keep the $386. That actually is crucially not what we want you to do, because we want to be able to see that exact money so that there's no question about where the $25,000 deposit came from.
Speaker 3:Exactly so. We need to see that and we need to know that that's the right money. So if you've got dollars and cents coming out, put dollars and cents into your personal account. Don't round it off in any way. And now, with the advent of Venmo and Zelle and things like that, there's also a lot of transfers that are done that way and we can identify those very clearly and use Zelle and Venmo with proper documentation to show that you might be paying a landlord or sometimes when we need alternative credit which we've discussed, I think, in a recent podcast. Those types of things we need. We have a lot of technology today. It's not like the old days where everything gets sent in the mail and we'll see it in 30 days, which allows us to close loans in a timely fashion Great All right.
Speaker 2:So that covers the assets needed. In terms of other documentation, mario, what do you typically when you're speaking with the borrower at the beginning of a transaction? What's the next piece you go to after asset?
Speaker 3:So if it's a person who already owns a home and we're doing a refinance or an equity loan product, unless they're with us, in which case, by the way, we don't need bank statements.
Speaker 3:We don't need a mortgage statement. But in a case where they don't have a mortgage with us, we need a mortgage statement, we need a tax bill and we need homeowners insurance declaration page that shows the coverages for single-family homes. I'm not going to go into the weeds with condominiums, but there's a lot more documentation that we need with condominiums. There's a list of things that we need that are part and parcel of the condominium we need to know about, like the trust documents and budget information and questionnaire that we send out or give to the borrower to have filled out. Those are things maybe that take too long to discuss today. But condominiums need more documentation proof of the HOA fees which comes on that form that we send out. But on a single family home or a multifamily home, it's going to be the mortgage statement, the tax bill, the homeowner's insurance. Those are the big three.
Speaker 3:If you're not with the bank already with your first mortgage, you can come to us and you don't have to be. You don't have to have a first mortgage with us to get an equity loan. In fact, I get a question a lot as an aside Do I have to become a member of the bank to do business with the bank? No, you don't. We're a bank that's more of a credit union feature. We are a federally insured bank. Anyone is welcome to come to us to borrow, as long as you're within our lending area.
Speaker 2:Right, and so I do want to go back to a piece that you mentioned in terms of the mortgage statement. People may say, well, hey, if you have a credit report, you can see I pay my mortgage on time, and we do. Getting a mortgage statement is not about timely payment is not about timely payment. It's really about letting us know are the real estate taxes and are your homeowners insurance? Is that inclusive in that monthly payment or is it external to that monthly payment?
Speaker 1:So what allows us to?
Speaker 2:make that determination is seeing the current mortgage statement showing that yeah, you pay on time, but also these items are included.
Speaker 3:Yeah, absolutely, and most of the time that is very identifiable. Every now and again it can be a bit ambiguous. Let's say taxes or insurance escrows, and we don't know if that means they have both, but by getting the tax bill we can then calculate how much the taxes are and understand that if there's $200 more coming out, well, that's probably the insurance too. Yep, and the other piece too.
Speaker 2:I want to just hit on real quickly. You did mention condominiums. There is an ancillary set of documents, the whole condo doc piece, which I think would be a great idea to dive into in a condo podcast.
Speaker 3:But, briefly.
Speaker 2:I mean that's simply we're looking at. You know, as Mario mentioned, you're looking at trust bylaws of the condominium, which are typically available. Sometimes they're public, sometimes there're management companies that handle this. And then you're looking at a condo questionnaire that Mario mentioned. So we learn things about occupancy of the condo complex, making sure people have paid their HOA fees on time. And then also we look at the budgets just to make sure that they're collecting reserves. 10% reserves are usually required for condominiums standard in lending. So that's a critical piece in the condo arena.
Speaker 1:The other piece.
Speaker 3:I want to touch on real quick. Don't forget insurance, condo insurance there's that too.
Speaker 2:And insurance is critical for both pieces. There and again we qualify condos a little bit differently than a multifamily or a single family home simply because the HOA fee is a piece. That's not involved.
Speaker 3:They can be drastically different. You can have a unit that otherwise looks exactly the same, and one unit has a homeowners association fee of $200 and another one has $500.
Speaker 2:Yeah, and those fees can get prohibitive sometimes, especially when it comes to qualifying. I also want to touch on one other thing that's very unique to our bank and we're very fortunate to be able to do this is we do allow a borrower to close in a real estate trust and there are certain types that can and can't be done, but we do entertain it. And so if a borrower, Mario, is speaking with you and they say, hey, by the way, the title of the property is not held by us individually.
Speaker 2:It's in a trust, Typically. Why don't you let the audience know what we typically do in that situation?
Speaker 3:So normally before we, for the sake of the borrower, I generally like to get a copy of the trust and, if existing, a scheduled beneficiaries. In newer trusts the scheduled beneficiaries is generally contained in the trust. In the older trusts it's a separate document, but we do have to have our bank counsel review that to make sure that we can legally lend on the trust. Some trusts are designed to be prohibitive for us to be able to perfect a lien on the property and, while we don't want to take people's homes, our responsibility is to make loans based on the equity in the home, thereby putting a mortgage on a property that gets recorded.
Speaker 2:Any lender needs to have access to the asset, so the attorney is going to review it.
Speaker 3:There's going to be an additional fee for that and if you have a trust where the beneficiary is another trust, then he's going to have to review multiple trusts, which can get excessive at times. But in any instance we have to, unfortunately, charge for that review. And then we have to create a trustee certificate and we have to file a trustee certificate along with the mortgage at the registry of deeds. So that's additional cost. I don't want to get into what it would cost.
Speaker 3:Each situation is a little bit different. It depends on what town you're into, but for the most part I think we've had to standardize that and I think the savings bank takes a little loss sometimes on those. But we're willing to do that to try to help customers out. But we do that and then we can lend. I will tell you that if it's an irrevocable trust, under no circumstances do we want to lend on an irrevocable trust. We have people that come to us often and their attorneys say, well, we'll just take it out of the trust. Unfortunately, the word irrevocable by our definition means it should not be taken out of the trust, that it is permanent. So and we just feel that that is something that we could put our borrower in a lot of jeopardy and we also would have a problem perfecting our lien. But when someone takes an irrevocable trust out of that status, I think there's tax implications that are above and beyond my pay grade that we have to worry about for that person.
Speaker 2:Yeah, so I think the biggest takeaway is we absolutely entertain loans in real estate trusts. There are some that are permissible, some that are not. The documentation that we're asking the customer for is typically a copy of that trust and the schedule of beneficiaries, and then what we simply do is provide that to our attorneys to review. Any of those review fees are a function of the closing attorney, and what they're doing is letting the institution know that there is a viable means to move forward.
Speaker 3:Right, and you know, there's a couple of things that we need to talk about, maybe something I didn't put on my list here, so I want to entertain.
Speaker 2:Sure go ahead.
Speaker 3:Moving away from trusts. Yes, what I neglected to talk about is gifts. Okay, so we're getting back to funds to close, so this is really in a purchase scenario.
Speaker 1:Yeah, so when we have a purchase scenario, one of the jobs?
Speaker 2:of the bank and our underwriter is to figure out A does the person? Can they afford the loan they're asking for? They have the means to repay and then, more importantly, after the money we lend them, usually there's a little bit of a difference that they have down payment funds and there's a number of different ways to get those down payment funds. A they can be saved funds. And the other piece that Marge just referenced is a gift, and a gift can come from a blood relative, a parent, a sibling, and that is money that is being transferred from that family member to you for the purpose of that real estate transaction.
Speaker 3:And I believe it could be a significant other if the person lives with you. Correct, it has to be someone that lives with you, because you can't get a gift from a disinterested party like a friend or a colleague at work. The idea of the gift is it has to be a gift. It cannot be a loan, because you cannot be borrowing your down payment. The point of down payment is to make sure that you are invested in your property, so that's why there really isn't a lot of 100% financing out there anymore. There's some 97% products, one of which we work with very well, and there's others that we don't engage in.
Speaker 3:They're different products, but for a gift, it's important to note a couple things. One don't necessarily be in a rush to transact the gift with your parents or your significant others or whatever. I often tell people wait on that, let's talk about it. You don't have to do it right away. If you do it well in advance, after two months the gift is no longer a gift. So if we don't see it on a bank statement because a gift happened six months ago, it's now your money.
Speaker 2:Those funds are now seasoned and we're not verifying that through a gift transaction.
Speaker 3:Right. But if someone's going to do that, oftentimes what ends up happening is occasionally can get convoluted and sometimes it might come over in six or seven pieces. You're best to try to make the gift as simple as possible because we need a gift letter which we have, a document that we can offer you. That's kind of a primer to how to fill out a gift letter. We need to see the gift coming to the borrower and we have to identify that it came from the donor who signed the letter.
Speaker 3:In most cases now that's transactionally done digitally. They wire money from their bank account to your bank account and we can see their name on the transaction. But if we can't, then we have to go to the donor and say can you provide the bank statement showing it came from you? So in those situations it gets a little sticky. Each gift situation becomes very unique. I just offered everybody try not to execute on the gift until you need to or until you talk to us, and the easiest way to still do it is for mom and dad or whoever to write a paper check.
Speaker 2:They can copy of the check. The doc was very easy.
Speaker 3:Yeah, copy of the check, proof of deposit, a proof of deposit with a deposit slip, and then we need to see your bank account. Has that money actually in there, so that it wasn't a fake check that was written but never executed?
Speaker 2:Right. So our job again is to verify funds, to close for the transaction, and paper trail is really the key piece here. And so again with the gift and we'll say copy of check. Obviously we know there's a lot of electronic means which may involve other verification, but simply fully executed gift letter. As Mario mentioned, we can provide you with the stock gift letter. It's a fill-in-the-blank, very easy document Copy of the check and or electronic transaction, whichever suits you, and then proof of deposit, also verified by a new bank statement from that account, showing that that deposit has indeed been, has hit your account and has been added to your overall balance, If you're in the middle of a cycle bank cycle you can't get the new statement.
Speaker 3:You may need to get a printout, but the printout has to be able to be identified as yours and the bank account that we've been working with with you.
Speaker 3:So sometimes it's best to just go to the bank and have them give you a printout that they signed. But again, I always emphasize anybody if you're coming to us, at least please talk to me first, because we'll probably be able to piece that together a lot easier with a conversation than have you start to do something you don't need to do right away and then you end up chasing down a lot more paperwork that then you need to. And you know, and I don't want I want my favorite thing that I can do to a customer is have them say to me that was a lot easier than I thought it was going to be, and it happens every once in a while. Sometimes it's a little more difficult, but when they can say that, then I feel like you know I've really done the best job I can do and got them through the process so easy that they thought it was, you know, not hard at all, and that's a nice feeling.
Speaker 2:That's great. We covered quite a bit of documentation. You know what I'd like to do in terms of what I did just real quick recap. So make it real nice and condensed here at the end. So, salary, w-2 bar. We're going to go through the whole transaction Most recent two pay stubs your last two years W-2s. Most recent two months bank statements.
Speaker 3:That's really the key core piece, core pieces unless you own a home, right, if you own a home, then we're going to ask you for a copy of your mortgage statement.
Speaker 2:Okay, we move on to someone who's self-employed, partially self-employed has rental income or is retired, we're going to go ahead and look for your most recent two years tax returns. If you are self-employed, only we will look for a year-to-date profit and loss and then we'll look for bank statements, as we mentioned, most recent two-month bank statements. I also want to just dovetail really quickly. If you are retired, we look at the award letter. The award letter is critical. At the beginning of every year you get that letter saying this calendar year, the Social Security Administration.
Speaker 2:Your benefit is X, so that letter is critical In terms of, again, self-employed parties. You know unaudited P&L things. Like you know, people have QuickBooks. Those are very easy documents to put together. Helps us ascertain where you are in that calendar year. And, again, most recent two months bank statements. If necessary, we might look at a 401k or IRA just to show additional wherewithal or funds to close or reserves, as we mentioned. But, overall, it's a fairly straightforward list.
Speaker 3:And it's not a one-size-fits-all.
Speaker 2:No, you know.
Speaker 3:That's the main thing I always say. Again, talk to us. We're always there to talk to you know, we're glad to discuss. Nothing is cookie-cutter when you're dealing with individual situations. Everybody's got a little different story, and I say story in the sense that somebody's working a new job but they have a five-year history in their field and they got a brand-new job and they're making more money. Somebody is a commissioned employee and we need to look at different things. There's a lot of different aspects to each individual.
Speaker 3:So I always tell people don't think you don't qualify until you talk to one of us, because quite often people disqualify themselves needlessly when they would really qualify and have the conversation with us, because everything's individual. Don't think it's cookie cutter and maybe because the last person you talked to or someone you know didn't need a document that you may need. Their situation might be a little bit different, but we try to make it as streamlined as possible. The minimum documentation is always the best and I'll end on this thought If I don't ask for it, don't necessarily send it to me, because sometimes you could send us something that we don't need to see and you're better off not sending it. You're just better off only send me what I need.
Speaker 2:It's the best required doc that Mario provides and you'll be in good shape, so that's about it on my end Fantastic.
Speaker 1:Well, I want to thank you both for joining us today and that was a lot of great information for consumers, whether they're new buyers or buying again. But thank you both. Thank you.
Speaker 2:Thank you, Allie.
Speaker 1:And I want to thank everybody for listening today and we will be back soon with another edition of TSB Money Matters.
