Applying for a mortgage can seem daunting. The application is lengthy, and when you submit it, you also need to provide supporting documents like bank statements and tax returns. But the good news is that the application is straightforward and easy to complete if you break it into sections as we do here.
If you are following our mortgage loan series, you will have read our overview of the mortgage process and the next step in the journey, which is selecting the right mortgage loan. Now we’ll walk you through the process of applying for your mortgage.
As we said, the loan application might seem lengthy, but it is necessary. The application provides your lender with a detailed account of your finances and the property you plan to purchase. As you fill it out, take your time and accurately answer the questions. If you are unsure about something the lender is asking, it’s better to clarify the question than to guess at an answer. Simple mistakes on the application can cause significant delays in processing the loan.
Here is an overview of the ten standard sections of any mortgage loan application. Keep in mind that your loan officer will help you complete certain parts of the application, and you can always ask for help with other sections if you need it. Additionally, the information you share is always kept confidential and protected under federal law.
The first section covers the basic loan information, including the total loan amount and the interest rate your lender originally quoted for you.
The second section is where you’ll share all the essential details about the property you will buy. If the loan is a construction or refinance loan, this is where you will document that information. You’ll also need to declare whether the home will be a primary, secondary, or investment property here.
The third section covers your personal information, including address, phone number, social security number, marital status, and birth date. Your lender will access your credit report using the information you provide in this section.
The fourth section details your employment history, which is critical information your lender needs to verify that you can repay the loan. If you’ve been in your current job for less than two years, you’ll need to list your previous job(s) to demonstrate a history of steady employment.
You will also need to sign a Verification of Employment (VOE), which your lender will use to obtain either verbal or written verification of your employment. Supporting documents for this section include your most recent paycheck stubs and W-2s for the past two years. If you’re self-employed, you’ll need to include a few extra pieces of information for verification.
The fifth section works like a balance sheet showing your monthly income and expenses. One thing to note is that your income is listed as gross income, so be sure to use your pre-tax salary, commission, and bonuses.
The sixth section asks you to list all of your assets and liabilities. Assets include savings, investment, or retirement accounts, as well as any other properties you own. Liabilities include long-term debts, like any outstanding loans, child support, or recurring job-related expenses. You will also have to submit recent statements for your asset and liability accounts.
Your lender usually completes the seventh section of the loan application. However, after they complete it, you should look it over to verify that the information provided matches the terms you’ve discussed with your lender.
The eighth section is where you declare- just like the section title indicates- your citizenship status and any previous financial difficulties you might have had.
The ninth section is an easy one. You simply need to provide your signature attesting that the information you’ve provided on the loan application is accurate and true.
The information you share on this 10th and final section is shared with the Federal Government so they can ensure your lender complies with fair housing, fair credit, and disclosure laws. To complete this section, you need to state your ethnicity and race. Or you can decline to provide the information if you’d prefer.
After you submit your completed application, your lender can begin processing your loan. Within a few days of applying, you will receive a written estimate of all costs and fees associated with your loan. This document is called the Good Faith Estimate, and it will help you prepare for your closing costs, which we will cover in our next post.
In the meantime, if you need help finding a lender or a real estate agent, we’re here for you. Our Home Captain Concierges provide home buyers and sellers free information, advice, and referrals to vetted real estate agents and mortgage lenders. If you want an advocate on your side, talk to one of our Concierges today.