Required Paperwork

What personal paperwork will I need?

Generally, you need paperwork verifying income, assets, and a sales contract.

Certain documents and information are required from the client for the application process. The documents focus on proving the client's income, credit and assets. Required information includes Social Security numbers for all applicants, current address (and previous addresses if less than two years), names and addresses of current employers, and verification of timely rent payment (if the current dwelling is rented). Timely payment can usually be demonstrated by a letter from the landlord or copies of the last 12 months of canceled rent checks (both sides). You will also need:

1. One month's worth of pay stubs from each wage earner.
2. Copies of the last two years of federal tax returns (all pages), and W-2s for those years. (Self-employed borrowers may need to produce additional documentation.)
3. Three months' statements from buyers' checking and savings accounts, plus documentation showing other relevant assets such as IRA's, CD's, etc. These are used to find the source of the down payment funds.
4. When you fill out the loan application, you will need to provide a copy of the actual purchase contract.
5. A complete accounting of all debts, credit card and charge account numbers, installment loans, creditor, payment history, etc. (Note: Installment loans with under 10 months left need not be counted.)

What type of forms will I be asked to sign?

You will be asked to sign a variety of federal and state forms, disclosures and fee agreements.

Some are designed to protect the lender, others to protect the borrower. If you are not sure what a form is for, or what it says, ask to have it explained before you sign it.

The loan application package consists of a series of documents that include the application itself (Form 1003), plus a series of authorization and informational forms.

While loan packages differ from company to company and state to state, most mortgage application packages will contain certain basic documents:

1. The Good Faith Estimate

   This form is usually prepared in the client's presence. It spells out the exact cost of the purchase or refinancing process from down payment, loan rate and points, to the estimated closing costs involved in the transaction. It is an excellent planning tool for the client, minimizing the element of surprise.

2. Form 1003 --The Heart Of The Application

   The entire loan application revolves around this form. Therefore, it needs to be carefully completed. Most lenders will not accept 1003s with whiteout or excessive corrections. The form covers the client's marital status, age, income, assets, property and employment. All debts are summarized on this form for later validation.

3. Equal Credit/Fair Credit Disclosure/Msc. Authorizations.

   Authorization to check a client's credit, promise of equal credit opportunity and authorization to release information needed for the application process. (By this stage, you should be very familiar with your credit report from each bureau.)

4. Transfer/Servicing Disclosure

   Advance notice that a lender may elect to sell the consummated loan to a secondary market.

5. Interest Rate Lock-In Agreement

   At the time of application, or thereafter, a client may elect to "lock" his rate, or float it until a few days before closing. A lock freezes the rate, for example, at 6-1/4%; it's a bet that mortgage rates will go up. If a client locks and rates go up to 7%, the client's rate remains at 6-1/4% . If rates go down to 5-3/4%, the client stays locked at 6-1/4% and loses.

   When a client elects to lock a rate, it's usually for 60 days. That's more than enough time for a good lender to process and close a mortgage. If the time expires and the loan is not closed, the interest rate reverts to the current market rate. On rare occasions, a mortgage company might try to delay closing a loan because the rate negotiated and locked is not profitable for them.

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