Learning Center

Information Needed When Applying For Home Loans:

Here's a list of the documents most commonly needed in order to apply and process a mortgage loan. You may need to supply additional documents depending upon the type of loan you're applying for. Information Needed When Applying For Home Loans

Social Security Number for all borrowers
Last 2 years W-2 forms
Most recent paycheck stubs, covering one month pay period
If self employed, need last 2 years signed complete tax returns, profit and loss statement for year to date and balance sheet for past 12 months
Residence address past 2 years (if renter, need landlord name and address or 12 months cancelled checks).
Last month's bank statements for any checking and saving accounts. Also statements for 401k, IRA's, etc.
Names, account numbers, balances and monthly payment on all open loans
If you choose to include income from child support/alimony, will need copies of court records of cancelled checks showing receipt of payment
If purchase, legible sales contract signed by Buyers and Sellers
If you are applying for a VA Loan you will need to bring your DD-214, Certificate of Eligibility, or statement from your Commanding Officer if you are on active duty
If you currently own rental properties you will need to provide mortgage account information, home insurance policy information, home equity account information (if applicable) and copies of current lease agreements

Tips for Saving Money on Your Home Mortgage:

Lenders are a lot smarter than you about mortgages. Do not simply call a bunch of lenders and ask "What are your rates?" Many lenders quote programs and rates that "sound good" because it was designed to "sound good".

Your objective is to find a lender you can trust. You'll find such a person through referrals from your friends, co-workers, and neighbors who are homeowners.

Determine which loan program is best for you. You may not want a 30 year fixed rate mortgage if you are only going to be in your home for 5 years.

Beware of "no cost loans". Remember, nothing is free.

Your lender is legally obligated to send you the Truth in Lending and Good Faith Estimate of closing costs within 3 days of application. These disclosures will show the costs and fees for a program on the date you applied. Read them and ask questions until you understand them.

Find out your lender's lock policy. They probably won't lock your rate until you tell them to.

Refinancing to obtain a new mortgage by replacing an existing one can save you big money, but not in the way you think. Do not go back to another 30 year loan even though the payment is lower because you can actually end up paying more. Keep the same payment you now have and it will reduce the term of the loan, saving you tons of money.

What Does it Mean to Lock-in My Loan Rate?

A Lock-in, also called a rate-lock or rate commitment, is a lenders promise to hold a certain interest rate for a specified period of time while your loan application is processed. Most lenders give you an option at application which allows you to choose if you want to lock in your loan rate at application, during the processing, or when the loan is cleared to close.

Make sure to receive a rate-lock agreement from the lender that details the exact terms of your loan. Do not rely on an oral agreement as oral agreements can be very difficult to prove in the event of a dispute.

If your loan is not closed within the Lock-in period, you may lose the interest rate. Most lenders will notify you before your lock agreement expires. You will have the choice to extend your lock period, usually for a fee, or let the lock expire and relock at the current market.

What is the Difference Between Pre-Approval and Pre-Qualification?

A pre-approval from a lender carries substantial weight with a seller because it shows that the buyer is serious. A letter from a lender states that the borrower's credit, bank references and employment have been verified. The letter is not binding on the lender because it is subject to other conditions such as an appraisal of the property.

Pre-qualification differs from pre-approval because pre-qualified is based on a lender's opinion, not on verification. Pre-qualification means a loan officer has determined a borrower is credit worthy and financially able to qualify for a certain loan.

What is a Mortgage or Deed of Trust?

A mortgage is a security instrument that you give to the lender; a document that protects the lender's interest in your property. There are two parties to a mortgage. You are the mortgagor, or borrower, and the lender is the mortgagee. A mortgage document creates a lien on the property, which serves as a lender's security for the debt. The lien is recorded in public records, probably at your county courthouse. Ownership cannot be transferred to someone else until you pay the debt to release the lien. Even if your loan is secured by a mortgage, you still have full title to the property. No one else has rights of ownership. A mortgage gives the lender the right to sell the secured property to recover funds if you do not pay the debt. The sales process is called foreclosure. Over half of the states in the United States use mortgages as security instruments. The other states use deed of trust, which serves the same purpose, but with a few important differences. A deed of trust is recorded in public records, where it tells everyone that there is a lien on your property. A deed of trust involves three parties. You are the trustor, the lender is the beneficiary, and a third party is the trustee, someone who holds temporary but not full title until the lien is paid. The trustee should be a neutral third party, someone who won't favor either you or the lender if problems crop up. In some states, attorneys act as trustees, and in others, title insurance companies often provide the service. The trustee cannot take your property for any reason, documents are in place to protect against that. The deed of trust is cancelled when the debt is paid.