September 6th, 2018 11:19 AM by Jackie A. Graves, President
application serves a simple purpose: 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 1003, is more complicated than that
straightforward intent might suggest.
Download a PDF of a blank mortgage application form.
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,” explains Greg Cook, senior loan
officer with Platinum Home Mortgage in Temecula, California. Instead, the loan
officer will fill in the details.
3: Borrower Information. This section asks for the
borrower’s and co-borrower’s full names, birthdates, addresses, telephone
numbers, Social Security numbers, marital status and other details. All of it,
Cook says, should be “a no-brainer” for borrowers.
4: Employment Information. This section enables the
lender to contact the borrower’s employer (or employers) to verify the length
and terms of employment.
two-year job history typically is a minimum requirement, according to Jay
Dacey, a mortgage broker for 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 warns.
5: Monthly Income and Combined Housing Expense Information. The
left side of this section is used to determine whether the borrower has the
financial ability to repay the mortgage. Cook says this information often
“requires some tweaking” because lenders calculate income differently than most
borrowers perceive it.
all lenders require you to sign IRS Form 4506-T, which authorizes the lender to
request a transcript of your tax returns.
potential glitch for self-employed borrowers early in the year is that last
year’s earnings can’t be used for loan qualification purposes until the lender
can obtain verification of a current tax return from the IRS, Dacey explains.
It takes four to six weeks for the IRS to process and verify a Form 4506-T.
right side of this section discloses the so-called payment shock the borrower
will experience as he or she transitions to new, often higher monthly housing
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.”
6: Assets and Liabilities. Assets refer primarily to
savings, checking, and retirement accounts and 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.
savings typically aren’t counted at 100 percent, Dacey explains, due to
investment volatility and early withdrawal penalties and taxes. As a general
rule, retirement savings are marked down to 60 percent or less, he says.
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.
separate Schedule of Real Estate Owned gives the lender a snapshot of the
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.
7: Details of Transaction. Cook says borrowers are
“never going to fill out” this section because the details depend on the terms
of the loan origination. Still, read it carefully.
8: Declarations. This section is the last chance for
borrowers to “own up,” to use Cook’s words, to any financial hiccups they’ve
experienced such as a bankruptcy, foreclosure or lawsuit.
your lender everything,” he advises. “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.”
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