The Mortgage Application Process
How to make it through the Mortgage Application process
by Henry Brown
In my 20 years in the mortgage industry I have found that the mortgage application is like any other form that has any had any federal government involvement. The easiest and least painful way to approach it is to realize that you are going to have to fill in every box and if you are prepared things will go smoothly the first time without a lot of follow up document gathering.
Here are things that will help you avoid aggravation along the way:
Name – give the interviewer your name as it appears on your driver’s license and/or social security card since this is what they will use to verify your identity and have these cards with you at the time as they may need to make copies (blame homeland security for this). This name should also be the same as it is on any deed you have if this is a refinance. If your name doesn’t match on these items be prepared to prove that you are all of these people. It is surprising how big a difference it is if you are John Public on one item and John Q. Public on another.
Address – You will not only need the property address of the home you are buying or refinancing, but also all addresses you have lived at for the past two years. You will also need to verify the rents and/or mortgages you paid during that time. This can be done through your credit report, verification of mortgage forms, verification of rent forms or cancelled checks. If you are going to use cancelled checks, bring them with you. The other listed methods would be performed by the lender but they will need you to provide names, addresses and phone number for former landlords or a monthly statement from a previous mortgage company.
Employment – Just like your address, this needs to be verified for the past two full years. If you have been on the same job for 2 years or more you should be able to get by with the most recent 30 days pay stubs and the past 2 years W-2 forms. If you have changed jobs they will need W-2 forms from all employers over the past 2 years along with employment dates, names, addresses and phone numbers. Be accurate because these will be verified in writing or over the phone. If you are self employed the past 2 years tax returns will be used. As well as a business license or a letter from an accountant stating that they have prepared a self-employed tax return on your behalf for the past 2 years. If you are on social security, pension or disability, bring documentation showing the amount and term of the benefit. If you are receiving alimony or child support bring a copy of the divorce showing the amount and term of this income.
Assets (What you have or own) – Bring 3 most recent months bank statements, all pages, all accounts. Bring your most recent statement on any investments or IRA’s. If you just sold a house to buy this one, bring your settlement statement. It is okay to estimate the values of your cars, but if you have loans against them make sure you value them higher than the loan balance. The last asset listed is personal property; this includes furniture, clothes, jewelry, tools, collectibles, etc. The value to list for this is not what you think it is currently worth, but what you think it would cost to replace all of it at full retail price.
Liabilities (what you owe) – If possible, bring the most recent statements from all mortgages, loans, credit card, etc. Try not to leave anything out because it will all show up in your credit report. If you are required to pay alimony or child support bring a copy of the divorce showing the amount and term of the liability.
Real Estate owned – If you own properties list them here. If they are rentals this is where you show your rental income, if you have mortgages on them this shows where you have equity. The values on properties, other than the one involved in the loan you are applying for, are your best guess estimates.
- On the third page there is a series of questions about your credit history, answer them all accurately since your credit report will verify this information. The last questions are called the HMDA questions and are required by law to ensure that the lender is not discriminating by race, sex or national origin.
- Be open and truthful with your loan officer, a good one will advise you on what issues are meaningless as well as which ones are a factor in your ability to obtain financing.