Applying for a Mortgage
When applying for a mortgage, your goal is to select the mortgage loan that is most favorable to your situation. In order to find the best home loan, you should plan to contact several mortgage lenders, including the lender to whom you presently make your payments (if applicable), to discuss the mortgages they have available, their rates, closing costs, and other fees.
When choosing a Lender, it's worth mentioning that mortgage loans are available from:
Mortgage companies
Savings and loan associations
Banks
Federal credit unions
Other financial institutions and brokers in your area
You can find mortgage lenders, online or check your local banks or credit unions. These tips can help you navigate the mortgage loan application process.
Applying For a Loan
At this stage in the process, home buyers have typically made an offer on a house, decided what type of mortgage they want, and selected a lender. The next step is to fill out a loan application. In moving forward, you should understand:
Pre-application steps
The information your lender needs at application
Decisions you make at application
Application costs you pay
Application legal requirements
Pre-application Steps
When you're about to apply for a mortgage loan, you should take the following steps:
Pre-qualification Letter Lender pre-qualification provides an estimate of how large a mortgage you can afford, subject to certain conditions. It doesn't obligate the lender to approve your loan, but it's a way to help narrow your home search to within your price range.
Ratified Sales Contract Most loan applicants go to their loan interview with a ratified contract of sale on a house in hand. Typically, your real estate sales professional has presented your offer to the seller of the property and helped you negotiate any sales contingencies (such as making repairs, settling by a certain date, etc.) A ratified sales contract means both the buyer and the seller have signed off on the final offer. This final sales contract is the starting point for the loan application interview and will specify the amount of your down payment, the price you will pay for your house, the type of mortgage financing you will seek, and your proposed closing and occupancy dates.
Earnest Money Deposit This is a "good-faith" payment you submit with the offer to show the seller that you are serious. The earnest money is deposited in an escrow account and will be applied to your closing costs. Sometimes, your lender will want you to bring a receipt for the earnest money deposit along with your sales contract to the initial loan application meeting.
Home Inspection Report A home inspector evaluates the structural and mechanical conditions of the property and will help identify problems before you purchase the home. Obtaining a satisfactory home inspection report should be one of the terms in your sales contract.
If you put this kind of contingency clause into your agreement, then you will be able to cancel the sales contract if serious problems are identified, or you may be able to get the seller to agree to pay for needed repairs or renegotiate the terms of the purchase.
The information your Lender needs at application
Before you meet with your lender, you will likely have to complete the Uniform Residential Loan Application, a four-page document that asks in-depth questions about you, your income, your assets and liabilities, and your credit as well as a description of the property you wish to buy.
In some cases, the lender may ask you to fill out a loan application online before your interview. The lender will then have your completed application form when you arrive for the interview. In other cases, you may have to email or fax the application to your lender prior to your appointment.
Some lenders may even let you fill out your application over the telephone with a loan officer.
Things you can do to help this process:
Gathering the documentation on the Uniform Residential Loan Application.
Making sure each applicant completes, signs, and dates each form.
Note: By receiving your completed application before your meeting, your lender will be better prepared to advise you.
