Our loan application 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.
It is easier to complete the loan
application process if you prepare for it ahead of time. We will ask
about your personal finances, including bank account numbers and
balances, current loan amounts and payments, and credit card account
numbers. You need to be thorough and precise in providing this
information, so it is best to assemble information before you meet
with us. 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 Purchase
Contract & 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:
- A complete copy of the sales
contract, including any addendums, signed by all parties, showing
the full names of the sellers and buyers as they will appear on
the new deed, the amount of earnest money deposit and who is
responsible for closing costs, origination fees, etc.;
- If the house is to be built, or
is still under construction, a set of plans and specifications;
- The complete mailing address of
the property, its age, and its full legal description; and
- Name, address, and telephone
number of the real estate agent and/or the seller of the property
who will assist the appraiser in obtaining access to the property.
Personal Information
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 for up to seven
years. 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 will need the name and address of your landlord(s) or
mortgage company(ies) for the past two years.
Employment History &
Sources Of Income
Your ability to make the monthly
payments on the mortgage and to afford the costs associated with
owning a home are primary considerations in our loan approval
process and should be your primary concern. Required information
includes:
- At least two year's employment
history with employer's name and address, your job title or
position, length of time on the job, salary, bonuses, commissions,
and average overtime pay;
- Recent paycheck stubs and
Federal W-2 forms for two years and perhaps full Federal tax
returns;
- Records of dividends and
interest received from investments;
- 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; and
- A written explanation if there
are gaps in your employment record due to circumstances such as
illness or layoffs, or for any other reason.
We will have you sign a Verification
of Employment (VOE) form or a general credit authorization form.
This will be sent to your employer to verify your employment and
earnings. One will be sent to previous employers if you have been on
the job less than two years.
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.
Personal Assets
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, both checking and
savings, 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 interests in all
retirement funds;
- Face amount and cash value of
insurance policies in force;
- Make, model, year, and value of
automobiles owned;
- 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; and
- Value of other personal
property such as furniture.
As with the Verification of
Employment, we will have you sign Verifications of Deposit (VOD) (or
a general authorization) for each of the institutions where you have
savings or checking accounts. Differences between the account
balances reported by the institution and the balance you give for
the loan application will have to be reconciled, so be sure you have
your correct current balances. Any recent large deposits will need
to be explained.
We will look for the source of funds
with which you will make the down payment and pay closing costs and
fees. Gifts from a relative, church, employer, municipality, or
non-profit organization may sometimes be used, but must be verified
in writing. In some cases, the donor must be a relative and must
provide a letter stating the donor's relationship to you, the amount
of the gift, and the fact that no repayment is expected. Receipt of
the gift funds must also be verified.
Personal Indebtedness
You will be asked to itemize all of
your current bills, loans, and other debts, including current
balances and monthly payments. Debts include automobile loans,
credit cards such as Visa, Mastercard, and other retail store
accounts, finance company, bank and credit union loans, and existing
mortgages, including home equity loans. You should be able to give
the account or loan number, the monthly payment, the number of
payments remaining, and the outstanding balance.
The information you provide on the
loan application will later be verified by a credit report ordered
by us. Like employment and deposit verification, differences between
your figures and those on the credit report will raise questions and
may delay the approval of your loan. It is to your advantage to take
time to get your data right prior to filling out the loan
application.
If you have had credit problems, you
should inform us promptly. We recognize that unemployment, illness,
marital problems, or other financial difficulties can temporarily
impair your credit rating. Provide a written explanation of the
circumstances regarding the problem to be included with the loan
application. We will consider such a written explanation as part of
the underwriting analysis. Chronic late payments, judgments, or loan
defaults, however, severely damage your credit standing and may
prevent you from obtaining the financing you need to complete the
purchase.
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.
You will also be asked to explain the
details if you are obligated to pay alimony, child support, or
separate maintenance.
Additional Information
You will be asked to sign a section
of the loan application form which contains your certification that
the information you have provided is correct to the best of your
knowledge; your promise to advise us of any material changes in the
information; and your consent to verification of the application
data.
The last part of the application form
requests information on the race and gender of the applicants. The
Federal Government uses this data to monitor our compliance with
fair housing and equal credit opportunity laws. Provision of this
information is strictly voluntary on your part and has no affect on
your loan application. We, however, are required by Federal law to
request the information.
Because of the particular
circumstances surrounding a loan application, we may require
additional information or documentation regarding you or the
property after the application has been submitted for approval. We
make every effort to collect all data at the outset, but cannot
foresee every eventuality. Requests for additional information are
not necessarily bad omens, and your primary concern should be in
responding promptly with the information.
At the time the application is taken,
you will probably be asked to pay for the credit report and
appraisal fees.
If you have come fully prepared to
the interview with the loan officer and have provided good
documentation, you have done a great deal to assure prompt
processing of your application and approval of your loan.
After The Loan
Application...What's Next?
After the loan application has been
completed, it will be turned over to our loan processing department
and then to the underwriter, where the decision to approve or reject
the loan will be made. Loan processors call to confirm the
information you provided, or send out the Verifications of
Employment and Deposit and order the credit report, property
appraisal, and other documents. The time it takes to receive these
documents affects the length of time required for approval of the
loan. If you are transferring into the local community, it may take
longer to receive the credit and employment information.
Within three business days after
completing the application, we must provide you with a "Good Faith
Estimate" of the anticipated closing costs. It will show costs
associated with the loan settlement, such as origination fees,
mortgage insurance, title insurance, escrow reserves, and hazard
insurance.
Within the same three days we will
also send you a Truth-in-Lending Disclosure statement. This
statement shows, among other things, the estimated monthly payment.
The total cost of all finance charges on your loan is also shown,
stated as an annual percentage rate (APR). The APR represents the
dollar amount of finance charges you pay either up front or over the
life of the loan, converted to an annual interest rate. Since the
APR includes origination fees and other charges, as well as interest
on the mortgage loan, the APR is usually higher than the interest
rate of the loan.
The Closing Process
After your loan has been approved by
the underwriter, 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.
The closing agent in this transaction
represents the lender and will conduct the closing on our behalf The
closing agent at this point has 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 survey and makes sure
that the lender has proper coverage. The borrowers may insure their
coverage in regard to survey and other title matters by purchasing
an owner's title insurance policy issued by the closing agent.
Items typically requested for the
borrower to bring to the closing are a one year's hazard insurance
policy and paid receipt, a certified (or cashier's check) for the
cash needed for closing, and a report from a certified termite
inspector which states that the property is free from infestation.
The closing agent will obtain the
necessary signatures on the closing documents and disburse the
money.
