Have you decided it’s time to take the plunge into home-ownership? Perhaps you’ve owned before, but it’s been a while since you went through the process, or maybe you are looking to refinance an existing mortgage. In all of these situations, you will start with a loan application. Although each lender may have slightly different requirements, most applications are somewhat similar.
When you are ready to fill out an application, you will need to gather some documents first. Federal regulations and banking requirements mean that lenders need to collect a lot of information from you before sending an application to the underwriters. So be ready to buckle down and start a file of paperwork.
If you already feel overwhelmed, that’s normal. The friendly experts at Twin City Lending are here to keep it simple for you. Give us a call today to get started with our concierge lending services.
Why So Many Questions?
When you sit down to begin your loan application, you may feel excited, motivated, and eager. As the questions continue on and on, however, you might start to feel a little bogged down or frustrated. You may begin to wonder why they need so much information from you.
Keep in mind that you are asking the bank or credit union for a substantial amount of money. They have to do their due diligence to make sure you will be able to keep up your end of the mortgage agreement. Also, many of the questions on a loan application reflect legal requirements from the government. The lender has no control over those parts of the process. They must be sure you metaphorically dot your I’s and cross your T’s.
Don’t feel like you have to complete the entire application in one sitting. Carve out 20 or 30 minutes to work on it. Then, if needed, find another chunk of time later on to continue. You will find the process a bit easier if you take some time to gather all of the necessary documents before you begin.
What Information Do I Need To Fill Out the Loan Application?
In general, a mortgage loan application will ask about three broad categories: employment, the property you wish to purchase, and money. Within each of these topics, there will be subtopics, and your answers will need documentation to support them. Here’s a look at the typical information you will need to supply.
- Where do you work?
- What is your position?
- How long have you worked there?
In general, a work history of at least two years with one company works in your favor during the loan process. Contract work and self-employment will make the process a little more lengthy. These situations certainly are not deal-breakers, but they do add more work for you in filling out the application.
- What is the address?
- Do you plan to live in the home as your primary residence?
- Will it be a rental property?
- Is it a multi-unit property?
- What is the purpose of the loan you are seeking for the property? Is it a new purchase or a refinance?
Single-family dwellings that you intend to live in make for the smoothest application processes. Financial institutions assume you will be highly motivated to make your mortgage payments for a home you live in, and therefore you are less likely to default.
If the property is a rental, you may need to provide a market analysis showing how much you can expect to charge for the lease. If you already have tenants lined up, the lender will love to see documentation of that arrangement.
This section is the biggie, and this is where the lender will dive into your viability as the recipient of their loan. The money questions on a loan application generally fall into three categories:
- How much do you earn at your job? Be prepared to provide W-2s,1099s, and recent pay stubs. You also need to supply the previous two years’ tax returns. In some situations, lenders will require additional returns.
- Do you have other sources of income? If you have dividends or rental income, include it here and provide documentation to support it. Include any alimony or child support you receive as well.
- Is your income steady or variable? Variable income can make the loan application process a bit more complicated, but your lender will walk you through any additional requirements.
2. Debts and liabilities
- How much consumer debt do you have? Be prepared to provide documentation of your credit card and other revolving credit debt.
- Do you have student loans or car loans?
- Are there any outstanding financial judgments against you, such as through a court? If so, you probably will need to show documentation of the judgment and payment schedule.
The lender will run a credit report and obtain a credit score for you very early in the loan application process. If you know that you have errors on your credit report, work to get those fixed before you apply for a mortgage.
- How much money is sitting in your bank account right now? Be sure to have at least two months of bank statements ready to go.
- Do you have any retirement savings, such as a pension, 401K, or IRA? Again, have your most recent statements available to go into your file.
- Do you have other investment accounts such as stocks, bonds, CDs, or mutual funds? Be ready with, you guessed it, recent statements.
- Do you own other property? If you have an investment property or paid-for cars, you may be able to list those as additional assets.
TwinCity Lending Can Help
Buying or refinancing a home is a significant process. But it shouldn’t have to be complicated and confusing for the buyer. The friendly team at TwinCity Lending is here to make your experience perfect. Let our experience and expertise work for you.
With our attention to detail and our ability to simplify the process for you, we will have you on the road to home-ownership in no time. If you’re ready to get started on a loan application, give us a call today. We can’t wait to serve you.