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What is a mortgage application?
a Mortgage application is a form that requires a future borrower or mortgage officer to purchase an existing mortgage that is normally completed or take out a loan to refinance an existing mortgage. This form covers all aspects of the borrower’s finances and the properties that accompany the loan. This includes:
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The history of employment of borrowers
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Borrower’s source of income
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Borrower’s debt
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Property details
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Purpose of the loan
Most mortgage lenders use a uniform mortgage application (URLA) or some variation to collect this information. There are two main Urlas. Fannie Mae’s Form 1003 and Freddie Mac’s Form 65. They are very similar, but you’re more likely to encounter 1003.
What is included in your mortgage application?
Form 1003 Mortgage Application includes the following sections:
Documents required to apply for a mortgage
When you first contact the mortgage lender, the lender will determine whether he or she is eligible for the loan through a process called Preproval. This step will provide credit and financial documents such as bank account statements and W-2 to lenders.
This same paperwork is usually used to complete your mortgage application once you have signed a home purchase agreement. The documents include:
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Paying stubs from at least the last 30 days
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Tax returns including W-2 from the past two years
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Proof of other sources of income
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Bank account statements for at least the past 60 days
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Investment and Resignation Account Statement from at least the last 60 days
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Proof of receipt of down payment gift letter and gift money
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If you are self-employed, business records and tax returns
This list also includes signed home purchase agreements, if applicable.
Mortgage application tips
Preparation is important when applying for a mortgage. In addition to putting all your documents in order, there are a few things you can do to ensure a successful application.
- Compare offers. Before applying for a mortgage, compare offers from at least three different lenders. Consider interest rates and fees.
- Document the source of your down payment. If a non-borrower is giving you funds for a down payment, you have a document showing where the funds came from and when they moved to your property. You will also need a signed letter from the donor to confirm that you do not need to repay the funds.
- Keep your work the same. If you can help with that, avoid quitting your job while your application is underwritten, as the lender can deny your loan if your employment situation changes. If you lose your job or start a new job, it’s not necessarily comparable to denial, but you’ll need to provide a letter explaining the change.
- Please refrain from large purchases or earning more credits. While your application is underwritten, avoid major changes to your credit or financial situation, such as applying for a new credit card or running out of savings on large ticket items. These types of movements can mean that a new application needs to be started. Or you could be denied the loan altogether.
- Consider your current debt. It’s always better to lower your debt-to-income (DTI) ratio, but that doesn’t mean you need to pay back all your debts before applying for a mortgage. “Talking with your lender before you decide to pay off or cut your debt,” says Rose Krieger, a Washington-based senior mortgage specialist. Churchill Mortgage. “They can provide insight into which options are more beneficial to you, potentially bringing a higher amount of advance equipment.”
- Please ask Rate Lock. Locking rates may help you ensure a lower rate, but be sure to understand your lender’s rate lock policy and check if extended fees apply.
