August 20th, 2020 11:20 AM by Jackie A. Graves
On the expense side, you’ll be asked to provide your monthly housing costs, such as rent or your first mortgage, HOA fees, or mortgage insurance.
In this section, you’ll list assets including savings, checking, and retirement accounts, and any properties you may own. Under liabilities, you’ll include all debts such as car loans, credit cards, other mortgages, and any alimony or child support you’re obligated to pay.
It’s best to be upfront in this section, even about seemingly small debts.
“Borrowers may think a small loan or car payment nearly paid off is not significant to disclose, and then when their credit is pulled it pops up,” Baisden says.
This section contains more information about the mortgage, such as prepaid costs, closing costs, mortgage insurance, and discount points. You’ll likely rely on your loan officer to fill out these details.
Here, you’ll confirm whether your financial history includes outstanding judgments or bankruptcy, foreclosure, or lawsuits. If you or your co-borrower have these issues, discuss them right away with your real estate agent and loan officer so they’ll know how best to guide you.
Like any application, this section is so the borrower can confirm that the information they’ve included is accurate, and acknowledge that the lender and other parties have permission to verify the information (or verify it again, if needed, in the course of doing business with the borrower). Here, you and any co-borrowers will sign and date the application.
In the final section, you’ll be asked if you’d like to share the information on the application with the government so that they can ensure the lender is compliant with federal laws pertaining to discrimination. If you do want to share this information, you and any co-borrowers can indicate your ethnicity, race and sex in this section. If you don’t, you’ll simply check off “I do not wish to furnish this information.”
Your lender will ask you numerous questions in the application, so you’ll need to know things like contact information, specific dates, numbers and more. Here are the main documents and information you’ll need to answer them:
If you’re self-employed, own a business or get paid through commissions, you’ll likely also need to provide additional information, as well, such as:
Note that your lender may request more documents during the underwriting process. This is common and expected — sometimes, a lender just needs more information so that they can clearly understand your risk level and determine your ability to repay.
Overall, preparation is key when applying for a mortgage. In addition to having all of your paperwork in order, there are a few things you can do to help ensure a successful application:
“If you’re preapproved for a $500,000 mortgage for a home that you’re purchasing for $600,000, you’re close to the maximum affordability,” explains Melony Swasey, a real estate agent with Unlimited Sotheby’s International Realty in Jamaica Plain, Massachusetts. “Then suddenly you buy a car with a car note — that could affect whether you get approved.”
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