The mortgage application process requires an extensive amount of forms and documentation ― all of which are designed to protect you (the buyer and mortgagee) as well as the prospective lending institution (the mortgage lender or mortgagor).
For the most part, forms and documentation that are supplied by the buyer during the mortgage application include supporting documentation for assets, liabilities, proof of earnings, and credit history along with the Purchase Contract. To expedite the completion of the Uniform Residential Loan Application, please have this documentation with you for mortgage application. [See related article “Preparing to Meet with a Mortgage Lender”]
Additionally, make sure that if your spouse or another individual is co-signing the mortgage application and will be legally responsible for repayment, that they also provide the supporting information required. [See related article “Understanding Mortgage Application”]
Those forms and documentation commonly required by lending institutions for mortgage application include the following:
Uniform Residential Loan Application
The Uniform Residential Loan Application (URLA) is used as a mortgage application for first mortgages, construction loans, and refinancing real estate. The data collected and documented on the URLA comes from the information you provide to the lender regarding your income, assets, debts, and credit rating. The URLA has the following ten sections:
• SECTION I ― Type of Mortgage Loan (FHA loan, VA loan, Conventional loan, etc.) and Terms of the Mortgage (term length, loan amount, interest rate – fixed or adjustable)
• SECTION II ― Property Information and Purpose of the Loan
• SECTION III ― Borrower Information (the mortgagees personal information including residence, date-of-birth, social security number, etc.)
• SECTION IV ― Employment Information
• SECTION V ― Monthly Income and Housing Expenses Information
• SECTION VI ― Assets & Liabilities
• SECTION VII ― Details of the Transaction (Contract for Purchase)
• SECTION VIII ― Declarations (any foreclosures, judgments, bankruptcy, etc.)
• SECTION IX ― Acknowledgement and Agreement (requires signatures)
• SECTION X ― Government Monitoring Information (ethnicity, race, gender)
Uniform Transmittal Summary (Form 1008)
After January 1, 2010, lenders must use version dated 06/09 for summarization of comprehensive risk assessment, as required for mortgage applications.
Qualifying Documentation (for certain mortgage applications)
• Certificate of Eligibility from the Veterans Administration (VA Loans)
• IRS Form 4506-T completed & signed (USDA Loans)
• Preliminary Title Report (USDA Loans)
• RD Form 1980-21 (USDA Loans)
Good Faith Estimate (GFE) of closing costs
Most lenders use some version of the Good Faith Estimate (GFE) required by the Real Estate Settlement Procedures Act (RESPA). This document, completed by the prospective lender, details the loan including costs for the title search and title insurance, attorneys fees, documentation filing, documentary stamps, pest inspection, flood inspection, local taxes, binder fees, notary fees, etc. The GFE is normally sent to the potential borrower a few days after mortgage application.
Truth-in-Lending Statement
The Truth-in-Lending Statement is required by the Truth in Lending Act and insures that the borrower is aware of the details of the loan as it pertains to the mortgage rate, total interest over the life of the loan, number of mortgage payments, total principle, property location, and borrower/co-borrower information.
Independent Appraisal
As part of the mortgage application process, the prospective lender(s) needs to verify that the property used as collateral to secure the loan is marketable, and that in the event of default or foreclosure, the lender has a reasonable opportunity of recouping losses by the sale of that property. [See related article “The Mortgage Application Process”]