Loan Conditions are items the lender wants clarification on before issuing a full approval. In all my years in mortgage lending, I don’t recall a single loan that didn’t have loan conditions. Some conditions are more serious than others, however. The more serious ones are deemed ‘prior to doc’ which means the lender won’t draw closing papers until these items are cleared. There might be some additional income showing up on some bank statements that don’t match up with regular paycheck stubs. The lender wants to know where this money came from and make sure it’s not a loan that has to be paid back at some point.
Yet there are some common loan conditions that appear regularly and borrowers shouldn’t be alarmed at them. One common condition is to provide another paycheck stub, even though you already submitted your pay stubs when you first applied. Why ask for more stubs? Loan files need to have all credit documents be less than 30 days old. If the file is going on 30 days, another stub will be needed to keep the loan in compliance.
Another might be to answer an ‘AKA’ query. This happens when someone applied for credit in the past under another name. This can happen to men or women but it’s more common for women who of course go by their maiden name, get married, and take the husband’s last name.
Another compliance issue relates to bank statements. And just like paycheck stubs, the statements need to be less than 30 days old. It’s good practice to have an additional stub or statement at the ready if the file is going to be more than 30 days old. This frequently occurs for those seeking an initial pre-approval who then go shopping for a home. At some point, the file will need to be updated once a property has been found and a sales contract signed.
One more final word of advice- don't freak out when the lender comes back and asks for more stuff. In most cases, it’s nothing more than some clarification or keeping the loan within the 30-day compliance period. Sometimes borrowers can get nervous when the lender has some questions, but in almost every case, it’s minor.
It’s your loan officer that will guide you with what needs to be provided at application time. Do nothing more than provide the lender with what is being asked for and move on. Don’t sweat it.
