I was reading an article by Laura Rowley on Yahoo Finance today regarding the importance of being prepared for potential natural disasters. It reminded me that many people that live in Southern California have some sort of emergency disaster kit stashed away in their garage. A typical kit may include drinking water, some can goods, flashlight, batteries, candles, medications, etc.

As a homebuyer, you should prepare your loan paperwork the same way and have all items ready in case of a loan emergency. Even though you provided your lender with the items necessary to process your loan, it is a good idea to keep a “shadow file” or Loan Emergency Kit just in case something gets misplaced…or the copier eats the only copy your lender had of your last paystub, W-2, you name it. 

That credit card late payment or mortgage late payment you had removed last year might show up again. Do you have the letter from the creditor handy? What about your landlord from a year ago. Do you still know how to contact them?

Here are some other items to keep in your Loan Emergency Kit:

• Proof judgments and/or tax liens have been paid.

• Copy of divorce decree and/or child support order.

• Paperwork regarding length of time a student loan is deferred.

• If retired, awards letters for social security or pensions.

• Quarterly asset statements (401k’s for example).

• Receipts or canceled checks for rent payments. More and more lenders are requiring this type of proof of payment if the landlord is a private individual.

• Bankruptcy papers including list of creditors and the discharge paper. If your lender did not ask for these at the beginning of the process, chance are that they will need them at the end.

• Tax returns with all schedules.

• W-2’s.

• Paystubs – save them all until the deal is closed.  

  Getting a call at the 11th hour from your lender requesting something you have already provided can be extremely frustrating. Sure, you could stomp your feet in anger and really give your lender a piece of your mind. You could spend a few extra days thinking of ways to cause them the same emotional stress that they are causing you. Or, you could just re-fax or re-email the missing item. Remember, you are dealing with people and all people, including you, make mistakes.  

Is there any excuse for these occurrences? Of course not. But underwriters are going over every file with a fine tooth comb these days and having your information at the tip of your fingers can iron out a small wrinkle before it becomes a giant speedbump.