A mortgage application's purpose is to help the lender decide whether to lend money to the borrower. But the industry-standard Uniform Residential Loan Application, also known as Fannie Mae Form No. 1003, is more complicated than that straightforward intent might suggest. (Bing: Download a blank mortgage application)This section-by-section summary can help you figure it out.Section No. 1: Type of mortgage and terms of loan. This section, which describes the loan program for which the borrower wants to apply, is "generally not something the consumer is going to be able to complete," says Greg Cook, a loan consultant and first-time-homebuyer specialist at Guild Mortgage Co. in Temecula, Calif. Instead, the loan officer will fill in the details.
Section No. 2: Property information and loan purpose. Most mortgage applicants haven't identified the property they want to purchase. So parts of this section will be marked "to be determined," Cook says. Borrowers must indicate who will own the property and how the title will be held. They'll also have to disclose the source of their down payment — e.g., cash, gift or a first-time-homebuyer program.Section No. 3: Borrower information. This section asks for the borrower's and co-borrower's full names, birth dates, addresses, telephone numbers, Social Security numbers, marital status and other details. All of it, Cook says, should be a no-brainer for borrowers.
Section No. 4: Employment information. This section lets the lender contact the borrower's employer or employers to verify the length and terms of employment. A two-year job history typically is a minimum requirement, says Jay Dacey, a mortgage broker at Metropolitan Financial Mortgage Co. in Minneapolis. That means specificity is crucial. "If you get lazy, and two years was really one year and 10 months, then all of a sudden the whole loan could be messed up," he says.
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Section No. 5: Monthly income and combined housing-expense information. The left side of this section is used to determine if the borrower can repay the mortgage. Cook says this information often "requires some tweaking" because lenders calculate income differently than most borrowers perceive it.Most lenders require you to sign Internal Revenue Service Form 4506-T, which authorizes the lender to request a transcript of your tax returns.Self-employed borrowers should know that early in the year, the previous year's earnings can't be used for loan qualification until the lender obtains verification of a current tax return from the IRS, Dacey says. It takes four to six weeks for the IRS to process and verify a Form 4506-T.The right side of this section discloses the so-called "payment shock" that borrowers will experience they transition to new, often higher monthly housing costs.Read: Are your home-loan chances better at a small bank?"If someone has been living with mom and dad, paying zero rent, and is taking on a $1,500 payment and hasn't been able to save any money, that's a signal to the lender to look closer," Cook says. "If they're paying $1,200 in rent, and the new house payment is $1,400, and they have a down payment and good credit scores, the lender is not so worried."
Section No. 6: Assets and liabilities. Assets refer primarily to savings, checking and retirement accounts, as well as other investments."If you have demonstrated an ability to save, and it's your own money in the deal, it makes lenders feel better," Cook says.Retirement savings typically aren't counted at 100%, Dacey says, because of investment volatility and early withdrawal penalties and taxes. Generally, retirement savings are marked down to 60% or less, he says.
Liabilities can be listed from the borrower's credit report, Cook says. Alimony and child-support payments also must be disclosed, so the lender can evaluate the borrower's financial obligations.The separate Schedule of Real Estate Owned shows the lender a borrower's other properties, if any. This section is especially important for move-up buyers who intend to keep their current home as a rental.
Section No. 7: Details of transaction. Cook says borrowers will never fill out this section because the details depend on the loan-origination terms. Still, read it carefully.Section No. 8: Declarations. This section is the last chance for borrowers to "own up," to any financial hiccups they've experienced, Cook says. These include a bankruptcy, foreclosure or lawsuit."Tell your lender everything," he says. "If it can be fixed, we can fix it upfront. If it can't be fixed, there's no sense getting into escrow on a house you're never going to close on."
Author:Mike Siers Phone: 252-489-3861 Dated: July 8th 2013 Views: 5,899 About Mike: Mike is a top producer in the Nations top Privately owned Real Estate company, Howard Hanna. With a...
About Outer Banks Real Estate Mike and Stacy Siers Howard Hanna
We could give you the scripted bio, but it is the age of Google. Believe me when I say if you are online, you can be found. I want to tell you what you may not know.
Stacy and I have been together for most of our lives. We enjoy being around each other so much we work together. I like to say she keeps me balanced. I have been fortunate to work for many people and companies throughout the Mid Atlantic region and feel that experience has helped me understand people and situations. I have been doing sales for about 20 years, construction during 10 of those years and have managed a few companies along the way. Stacy, operated a HVAC company, managed retail and restaurants. Stacy started in Real Estate in 2008, not the best time if you dare to remember the real estate crash. She motivated me to get my license in 2009 and I started in 2010. I looked at the bad real estate market as an opportunity. A time to learn the market from the bottom up. A time to learn how to sell real estate when no one could buy it. In one of my past jobs, I learned the who, what, whens and hows of sales. I could move products! When I bought my first house out of college, I learned this was one of the most important purchases I would ever make. So when we work with clients, it is about them. We want to know why you are looking, how you want to use the house or what you are selling. What memories you have made from this house. We believe real estate is about people and relationships. We are fortunate to build friendships through real estate. It usually means we go to a lot of dinners in the summer when folks are down. (I really love that part)
The wrap up, Stacy and I won't sell you a house on The Outer Banks of North Carolina. We will work with you, share our knowledge, provide facts and dig for information on every home you are interested in and hopefully grab a bite to eat and share the memories you are making!
"We've now used Mike Nolan at OBX Waterfront Properties for two purchases in the Outer Banks. Our first purchase was an income property in Avon, NC and from the first phone call Mike was easy to talk to and very friendly. He listened to what we were looking for in the property and explained how everything would work and what we should expect. It was clear from the start that he was also professional and very knowledgable about realty on the Outer Banks. The purchase of that property went so smooth and easy with Mike Nolan's lead that when it came time to buy a full time home in Nags Head a few months later, we didn't even think twice about looking for another realtor. Mike was going to be our guy! I can honestly say that it wouldn't have been possible to even make the move to the place we've always dreamed of living without the support of Mike Nolan and OBX Waterfront Properties. Saying that he went above and beyond the call of duty isn't even coming close to the amount of work and dedication he puts into each and every sale. Buying both properties from 500 miles away wasn't easy, but Mike was always easy to reach and always stayed on top of every appointment, every inspection, and every other aspect of buying both properties. He's one of the few people that I've met in my life that will truly put the client before everything else and words can't express how grateful we are that we found him to help us move on to the next chapter in our lives. Mike, thank you so much for making our dreams a reality!
- Mike and Christina Burns "