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  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.
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