The Loan Application
It all starts with the Loan Application. This form asks for information on the property you are buying, as well as the employment and financial history of all loan applicants. We will verify the information shown on the loan application before deciding whether or not to make the loan, so it is very important to make sure that it is complete and accurate.
Following is a summary of the major kinds of information required on the loan application, the documents that may be needed, and the questions that you should be prepared to answer.
Details Of The Property
Because the property is security for the loan, we will have an appraisal made of the property; and you will need to have the following information available:
- If you are purchasing the home, a complete copy of the sales contract, including any addendums
- The complete mailing address of the property, when built and when purchased (if refinance)
- And if purchasing, the name, address, and telephone number of the real estate agent and/or the seller of the property who may assist the appraiser in obtaining access to the property
We will need to obtain your and any other co-borrower’s Social Security number, age, number of years of schooling; number and ages of dependents, current address, and telephone number. If you have lived at your current address less than two years, be prepared to furnish former addresses. You will also be asked to detail your current housing expenses, including rent or mortgage payments, real estate taxes, and insurance (your mortgage payment may include tax and insurance funds). You may need the name and address of your landlord(s) or mortgage company(ies) for the past two years.
Employment History And Sources Of Income
Your ability to make the monthly payments on the mortgage and afford the costs associated with owning a home are primary considerations in our loan approval process. Required information includes:
- At least two years employment history with employer’s name and address, your job title or position, length of time of the job, salary, bonuses, commissions, and average overtime pay
- Recent one full month’s paycheck stubs and Federal W-2 forms for two years and perhaps full Federal tax returns if you are on a commission or bonus plan
- If you are self-employed, full tax returns and financial statements for two years, plus a profit-and-loss statement for the current year to date
- A written explanation if there are gaps in your employment record due to circumstances such as illness or layoff
We will have you sign a general credit authorization, which will be sent to your employer to verify your employment and earnings.
If you are relying on income from other sources, such as rental property, Social Security, disability payments, child support, etc., you must provide adequate proof of the source. Appropriate documents could include canceled checks, copies of leases, Federal tax returns, certification of benefits, divorce decrees, and similar evidence.
A detailed listing of your personal assets is required on the loan application form. You will need to have the following information available to complete the form:
- All bank accounts and money market accounts with the name and address of the institution(s), name(s) on the accounts, account numbers, and current account balances
- Recent bank statements for at least two months
- Current market value of stocks, bonds, CDs and other investments
- Vested interest in all retirement funds
- Address and market value of all real estate owned, along with the amount of rents collected, the mortgage on the property, the monthly mortgage payments, and a list of monthly expenses for investment properties
You may be asked to itemize all of your current bills, loans, and other debts, including current balances and monthly payments. Debts include loans; credit cards; finance companies and existing mortgages, including home equity loans. You will also be asked to explain the details if you are obligated to pay alimony, child support, or separate maintenance.
Any information provided on the loan application will later be verified by a credit report ordered by us. Your credit score is an important factor in loan approval.
If you have been through bankruptcy or foreclosure proceedings within the past seven years, be prepared to give full details and copies of applicable documents regarding them.
After The Loan Application – What Next?
After the loan application has been completed, it will be turned over to our Loan Processing department. Loan Processors call to confirm the information you provided, or send out the verification of employment and deposit, order the property appraisal and other documents such as a Title Report. The time it takes to receive these documents affects the length of time required for approval of the loan. Once all of the documentation is ready the loan file is sent to Underwriting for approval.
An Underwriter will review the content of the loan application package and compare it to the guidelines of the Loan Program that is being requested. Different programs such as FHA, VA, USDA Rural and others each have their set of guidelines that must be met. Assuming that the Underwriter approves the loan, the loan can proceed to the closing stage.
The Closing Process
After your loan has been approved by the underwriter, and all conditions met, it is sent to the closing department. Once again, everything is checked for accuracy and the closing package is forwarded to the approved closing agent (e.g. Title or Escrow Company). The closing agent in this transaction represents the lender and will conduct the closing on our behalf. They will have already run the title search and insured that the property is able to be conveyed by the seller without any encumbrances. The closing agent checks the title and makes sure that the lender has proper coverage.
The borrower may have to bring in a certified (or cashier’s check) for the cash needed for closing.
The closing agent will obtain the necessary signatures on the closing documents and disburse the money.0