After you have signed your contract to purchase your new home or decided to refinance your current one you will have to apply for a mortgage. (Of course, if you are able to purchase your property for all cash, then a mortgage is not needed). On a purchase, if you placed a deposit upon signing the contract, this amount should be in the possession of an escrow agent, realtor's office, an attorney or a third unbiased party to the transaction.
In this section we will outline the entire process in the following sections -
DOCUMENTS NEEDED TO PROCESS YOUR LOAN
DEBT RATIOS
MORTGAGE PAYMENT
FIXED RATE MORTGAGE
ADJUSTABLE RATE MORTGAGE
PREPAYMENT PENALTY
NEGATIVE AMORTIZATION LOAN
DISCLOSURES
SIGNED DOCUMENTS
APPRAISAL, INSURANCE, TITLE
UNDERWRITING
CLOSING
SPECIAL NOTE FOR REFINANCE
The following occurs during the mortgage process.
DOCUMENTS NEEDED TO PROCESS YOUR LOAN
Below is a list of some of the documents you will need to begin the process. Depending on your unique situation the lender may require additional documents as the process progresses.
PURCHASES
• Copy of picture ID – Passport or Drivers License
• Social Security Card
• If you were not born in the US, show proof you can live and/or work in the US (Green Card, Visa, etc)
• Pay stubs for all employment (current month)
• Past two years tax returns with all attachments, or W-2 for the last two years. If you are self employed, the tax returns are required along with the corporate tax returns (if you are a corporation) AND a Profit & Loss statement.
• Awards letter or documentation (proof) of any other source of income SSI, child support, retirement, 401K, Social Security, etc.
• Last two months bank statements for savings, checking or other proof of assets
• Rental/Lease agreements for any rental properties (please list properties owned on a list)
• Any legal documents - Bankruptcy, Divorce or other. Need all pages.
REFINANCE – with the above documents, you will also need the following:
• Mortgage statement(s) showing phone #, Account #, Bank Name (for payoff)
• Insurance paperwork showing your company and the coverage on the property
• If applicable, the Homeowners Association name and telephone #
• Copy of Survey – must be less than 10 years old
• Title Report – the simultaneous policy you received in the mail after your first closing
THE APPLICATION
Next, a mortgage application must be completed with the Mortgage Broker or Lender. The application form will include your personal information, name, social security number, number of dependents, if the property is being purchased jointly or individually, (if jointly how title will be held), your current address, the address of the property your are purchasing, the type of property, (single family, duplex, etc.) the purchase price, the amount of your deposit, the mortgage amount you are applying for, your income, your current assets and liabilities, your monthly payment, monthly amounts for taxes and insurance, and your signature(s) and more. It is a five page application that is required to secure any typical mortgage.
As proof of the information submitted on your application, you will be asked to produce the relevant documents to substantiate what you stated in the application. For example, if you said you have a job and that you are employed on a full time basis, you will need to produce your last two months salary stubs, the positions you held and with which firms for the last two years, including starting and termination dates, etc.
ADDITIONAL INFORMATION
Based on the information contained in your application, your credit score and the information you provide the Mortgage Broker or Lender, they will begin the search for the mortgage product which suits your particular situation.
For instance, if you are planning to stay in your home for the foreseeable future, the lender may recommend a fixed rate mortgage as opposed to an adjustable rate mortgage. On the other hand, if you inform your lender that you intend to relocate within two to three years then your representative may suggest an adjustable rate mortgage. Your representative will then explain certain terms and conditions that may be included in the mortgage documents and discuss with you your options. He will also discuss with you items which should be given careful consideration in selecting your mortgage program and ensure that you completely understand each and every one of them.
Below are some of the terms and conditions your representative may wish you to consider before selecting a mortgage program.