Don't Get Lost In Your New Home Loan's Paperwork
by Meiling Hunter
After getting your credit in order and using an online mortgage calculator to determine the monthly payment you can afford, get to know the paperwork you and your lender should expect from each other. Whether you are refinancing or purchasing a home, getting a new home loan requires some legwork and expectations on your part.
Your Mortgage Homework
The first step in obtaining a new home loan is filling out the widely used Universal Residential Loan Application (Fannie Mae Form 1003). On this application, you will be asked basic questions, such as your full name, current address, social security number, employment history, and asset and debt information. In addition, you should have the following ready for your lender:
Not all lenders and loan programs are the same. If you have exceptional credit or are making a huge down payment you may not need to provide all of this documentation.
- Income source: Federal tax returns if you're self-employed, W-2 forms (last 2 years) and at least one recent paycheck stub if you're not
- Any other income sources: A second job, overtime, commissions/bonuses, interest and dividends, social security disbursements, VA and retirement benefits, alimony, and child support.
- Investment records: Mutual fund statements, bank statements, stock certificates, and proof of other investments or assets.
- Rental history (if applicable): The lender may request a history from your landlord, or you can provide canceled checks showing mortgage or rent payments for up to twelve months.
- Purchase contract: Not applicable if you are refinancing.
Mortgage Documents from Your Lender
Within three days from the time you apply for refinancing or to purchase a home, your lender is required to provide you with the following documents:
Remember, this is only the first step in obtaining a new home loan. Underwriting, home appraisal, title search, and other necessary stages will be completed before you are granted a new home loan.
- Good Faith Estimate (GFE): A GFE discloses all of the fees associated with your potential mortgage. Be a smart shopper--get GFEs from two or more lenders and compare their fees.
- Truth In Lending Act statement (TILA): The federal Truth In Lending Act requires lenders to disclose in writing the terms of the new home loan, including the annual percentage rate (APR), rate adjustments, prepayment penalties, and other conditions.
- Servicing disclosure statement: This disclosure lets you know that your lender may not be the one that collects payments, handles disputes, send out escrow payments, and perform other various functions after your loan closes.
- Affiliated business agreement disclosure: This form states that you are not required to use the services of an in-house lender if you are buying a home from a builder or using a real estate agent. You are completely free to shop for mortgages elsewhere.
About the Author
Meiling Wong Hunter has worked in the mortgage industry for four years She graduated from the University of California, Davis, with a double major in Economics and Philosophy.