Central Illinois Title Company

Central Illinois Title Company - Professional Insights for Realtors

Financing Pitfalls: Documentation Requirements


Lenders are increasingly strict about income verification. Advise clients to avoid major purchases, job changes, or credit inquiries during the loan process. Self-employed buyers should prepare two years of tax returns and profit/loss statements. Pre-approval letters older than 60 days may require updates.
- Income Documentation Standards:W-2 employees need 30 days of recent pay stubs, two years of W-2s, and employment verification. Self-employed borrowers need two years of complete tax returns with all schedules, current profit/loss statements, and business bank statements. Contract employees may need two years of 1099s and evidence of contract renewals.
- Credit Monitoring: Advise clients to avoid opening new credit accounts, making large purchases on credit, or cosigning loans during the mortgage process. Even small changes can affect debt-to-income ratios and require loan reprocessing.
- Asset Verification: Large deposits require sourcing documentation. Gift funds need donor letters and bank statements. Investment account withdrawals need statements showing the liquidation. Cash savings should be seasoned in accounts for 60+ days.
- Employment Stability: Job changes during the loan process can derail financing, even if income increases. New employment may require 30-day pay stub history before loan approval. Commission-based income changes require extensive documentation and may affect approval ratios.

For more real estate insights and title services, contact Central Illinois Title Company in Decatur. We're here to ensure your transactions close smoothly and on time.

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