Now that you’ve found your dream home and completed the pre-approval process, it’s time complete your mortgage loan application. As you go through this process with your lender, you’ll work together to determine your eligibility, identify and validate the loan’s terms, costs, and property value, among other requirements addressed in your mortgage loan application.
First, you’ll complete a Uniform Residential Loan Application, for which you’ll need the following:
- Current paycheck stubs, as proof of income.
- W2s for your most recent tax year.
- Statements from all your financial accounts, including banks and investments.
- Statements detailing all outstanding debt.
- Tax returns.
- Proof of any supplemental income.
Once your lender has gathered all your information, they will review the documentation and confirm your approval. In addition to evaluating your payment capabilities, credit score and the property value of the home you’re interested in purchasing, they will also evaluate your housing expense ratio (what it will cost you to pay your mortgage) and your debt-to-income ratio (how much you’ll be spending on your mortgage and other debts.)
Three days after submitting your application, you’ll receive an initial disclosure package from your lender, which will include a Loan Estimate, the terms of your loan, all estimated costs, your APR, finance charges and your proposed monthly payment. An appraisal of your home will be scheduled to help determine its value both in relation to your loan, and the home’s purchase price.
As you’re going through the loan application process, it might help to submit applications with other lenders and compare the Loan Estimates to determine your best option. You never know what kinds of deals you can find!