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One AUS May Approve While Another Could Decline.

While both Fannie and Freddie use their own AUS to underwrite the same type of conventional loans, their underwriting guidelines are sometimes slightly different. Loan officers can choose to use either for a loan decision, but most fall into the habit of using one or the other. Or perhaps a mortgage broker has a favorite wholesale lender who is primarily a Fannie lender and seller, so the broker would use Fannie's system. But when a loan doesn't get approved with an AUS and tweaking doesn't work, the loan officer could mistakenly assume that the loan isn't approvable. But it could be only that the loan officer needs to use another system to get the loan approved.

Both Fannie and Freddie are constantly updating their automated underwriting systems, as are their government counterparts at the VA, FHA, and US DA. Sometimes changes will be made by one agency but not by another.

You Don't Have to Supply Tons of Documentation at Application, Even if Your Loan Officer Asks for It.

You may still see loan officers who ask for absolutely everything up front, perhaps even before you have picked out a property. This is old school. It's not a bad thing, mind you, but it's still old school.

There's no need to start digging out all your old financial statements, tax returns, divorce decree, or whatever—unless the AUS asks for it. Unfortunately, there are too many loan officers who ask for absolutely everything that could possibly be required for a mortgage approval at the very beginning of the loan process.

Dragging out all sorts of documentation that's not needed is a real pain. The catch with such an approach is that whatever you provide, your lender has to verify. If you say you have $12,298 in a savings account, $49,442,235 in lottery winnings reserved for your grandkids, and about 14 other investment accounts worth about $13,988, then guess what? Your lender will have to verify every single item you entered on the application—whether or not you need that information to close the deal.

I'll give you an example.

You want to buy a $200,000 house, put 5 percent down, and have the seller pay all your closing costs. You need approximately 5 percent of $200,000, or $10,000. So you provide three months' bank statements showing that you have $12,533 m your account. So far, so good. You're done, right?

But you also put down that you have a 40i(k) account, an IRA with about $9,500 in it, and an investment account with another $5,000. Since you put all that information on your application, your lender has to verify it, whether or not you needed it to close your deal.

You may have needed only $10,000 to close the $200,000 purchase, but since you added all that other stuff, you have to provide documentation proving your claims. This means more documentation and more work on your part.

And each time you provide more information, there's the possibility of more problems—problems that may not necessarily lead to your loan being declined, but that will cause you more headaches.

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