Tips for Completing a Mortgage Application

Taking out a mortgage can be exciting but stress-filled process. As if budgeting for a home and searching for an ideal property weren’t enough of a headache, the paperwork involved in the official mortgage application can prove to be time consuming and confusing as well. Before embarking on the application process, therefore, it can be helpful to know what information will be required of you, so you can compile all of the necessary documents and details ahead of time.

Personal Information

Of course, any loan application is going to ask you for your basic personal info (name, address, etc.), but mortgage loan applications ask you to detail your owning and renting history as well. Be prepared to enter information pertaining to your previous residences dating at least two years back, regardless of whether you rented or owned property. If you rented, the lender will contact your landlord to obtain information about your rent payments and any eviction histories. If you owned, the lender will require all information pertaining to previous mortgages and mortgage payment histories. If you are taking out the loan with a spouse or family member, keep in mind that both parties are required to provide this information.

Property and Loan Description

In addition to providing a detailed history of your previous residences, you will also need to describe the property you hope to purchase if granted the mortgage for which you are applying. The application will ask you not only to itemize the kind of loan you are requesting (i.e. whether it is a conventional loan or a government subsidized mortgage like an FHA loan), but will also ask you to describe the size and history of the property. You will need to list the year the property was built, the number of different rooms, the square footage, and any other necessary information. If you are taking out a construction loan, be prepared to list all of the anticipated construction and repair work planned.

Employment and Income Verification

Before filling out a mortgage application, you’ll also want to carefully compile information pertaining to your household income, including any assets or investments. Lenders will need to know how much you’re worth—and what kind of mortgage payment you can afford—before processing or approving a home loan. You will also be asked to provide the address and phone number of your current job, as well as a contact name so that the lender can verify your employment. If you have held your current job for two years or less, you will also be required to provide the same information with regard to your previous job.

When filling out a mortgage application, you will also be asked to itemize any liabilities—such as debt—that may impact your ability to make mortgage payments. It is important to  be as accurate and honest as possible when providing this information, as accuracy will help you secure the most appropriate (and, in many cases, the lowest) mortgage rate possible.

How to Find the Right Mortgage Lender

Selecting a mortgage lender can be one of the most difficult and confusing aspects of the mortgage application process. Do you go through a broker or work alone? Do you select a bank or a credit union? How do you narrow your options? These are pressing questions for any potential homebuyer. Because the decision you make can have a significant impact on your interest rates and loan terms, it’s important to select your lender with caution.

Know What Questions to Ask

First and foremost, it’s important to know what questions to ask when “interviewing” potential mortgage lenders. Many applicants simply ask about interest rates and fees, but it’s important to be more specific than this to get a better sense of what a lending institution is really like and whether they have your best interest at heart. For example, ask about the various types of loans they offer, how soon they can provide a good faith estimate, and what their closing costs are. Additionally, ask them to explain their rate and fee scales, rather than just listing off numbers.

Ask Around

It’s also important to inquire about the mortgage application and loan process outside of the lending institution sector as well. If you have friends who have recently purchased a home, ask them about their lender. Were they happy with the rates and fees? Did any of their loan terms change unexpectedly? Were they hit with hidden fees? Did the lender walk them through the mortgage application process carefully and thoughtfully? A positive review from a trusted friend can be a great sign.

Consult a Professional

If you are working with a real estate agent that you trust, he or she can also be a sound resource for lender referrals.  After all, an agent who is truly acting on your behalf will never direct you to a lender who has proven unreliable in the past, as this bad advice can negatively affect the agent’s reputation and future business. If a real estate agent is hesitant to provide a single name, ask them to at least provide you with a short list of the most reliable and reputable lenders, which will help narrow down your options.

Decide Whether You Want a Broker

If you find the task of selecting a lending institution on your own to be too overwhelming, you may want to consider working through a mortgage broker. A broker acts as a liaison between the applicant and the lender, and he or she will typically choose the bank or credit union that will service your loan. They will also help in drawing up and explaining all of the paperwork and application details. Mortgage brokers can streamline the application process, but they do charge a fee, so you’ll need to factor them into your budget.

The key to selecting the best mortgage lender is research. If you are prepared and informed when you enter into the mortgage application process, you’ll be much better equipped to identify unreliable lenders and to ultimately select a lender who will truly work in your best interest.