Arranging for Financing
Mortgage Application Process
One of the most important processes related to your new home purchase is that of securing mortgage financing. We have provided a checklist of the typical information which is required by a mortgage lender in making an assessment of a borrower's qualification for a new mortgage loan. Additional information may be requested later depending on your particular situation. There are several vital steps you will need to take in order to ensure a smooth, well-organized mortgage application and processing.
- According to the Residential Real Estate Purchase and Sale Agreement, typically you are required to apply for mortgage financing within five (5) days of mutual acceptance of the Agreement.
- During your mortgage application, the loan officer will use the information you have provided and will explain to you the mortgage choices available, how the application process works and the costs you are likely to incur to process the application and to cover escrow expenses. There may be some upfront expenses such as application, credit reports or appraisal fees (also known as prepaids) due at this time.
- Following your mortgage application, you may receive inquiries from credit verification companies enlisted by the lending institution to research your application. This is a routine procedure.
- Within a few days of your mortgage application, your lender will be able to give a preliminary evaluation and a preliminary approval based upon the information which you have provided.
When the lender has received job verifications from your employers, deposit verifications from your banks, credit reports, appraisal verification and any other exhibits needed, they will submit your completed file for final approval.
- Normally within 15-20 days after your mortgage application is complete and all necessary information is gathered, the lender will issue a loan approval in the form of a "commitment," a document which expresses the lender's willingness to lend you money under a specific set of circumstances and conditions. Please note that the timeframe set forth above is an approximation only and the timing may vary significantly based upon your particular situation.
- Your lender will provide "truth-in-lending" and estimated closing cost statements in writing. These are "good faith" estimates of the charges. Your costs at close of escrow may be somewhat different, but these estimates will give you a guide for planning for the dollar amount you will need at close of escrow.
- If loan approval is subject to certain conditions (sale of another home, etc.), you will have to provide evidence of satisfying those conditions prior to closing on your new home.
Once again, remember that your Westcott Homes community sales manager is on hand to guide you through the very important and sometimes complicated mortgage application process. Please call on them at any time if you have questions or concerns.
Mortgage Application Checklist
In order to avoid delays and to speed up your loan application, the following is a hypothetical checklist of the required documents and information you will need for your application. As mentioned earlier, your lender may require additional information.
Documents for Lender
- New Home Purchase Agreement
- Sales contract, if selling present home
- Social Security number for each borrower
- Date of birth of each borrower
- Address of residence(s) for past 24 months
- If self employed or commissioned, Federal tax return for last two years
- Divorce decree (if applicable)
- Bankruptcy papers (if applicable)
- Employment history of each borrower for a minimum of 24 months
Other permanent sources of income
- Interest/dividends, pensions, disability, child support or rental income
- Deposit Accounts: checking, savings, credit union, IRA's, CD's, etc.
- Name, address, zip code of each bank or credit union
- Account number of each account & current balances
- Outstanding Loan Accounts: furniture, auto, present mortgage, etc.
- Name, address, zip code of each lender
- Account number for each debt account & monthly payments
- Current unpaid balance
- Credit Cards
- Monthly payments & current unpaid balances
Previous Credit References
- Name, address, zip code of each bank or lending institution
- Account number, highest credit & date paid off
- Cash value of life insurance & amount in force; monthly premiums paid
- Household and personal property value
- Auto(s) year, make and model; value
- Other assets; boats, motorcycles, jewelry, savings bonds, etc.
How to Finance the New Home of Your Dreams
If you have your heart set on purchasing a particular home or if you are simply looking for a new home that you will instantly fall in love with, then here are some helpful tips on how to finance your dream home:
Fix up your credit report. Before you jump into the home-buying process, you should get a good idea of what your credit score looks like. Acquire a copy of your credit report so that you can find a way to clean up any areas that may pose problems for you when trying to get approved for a loan. Sometimes, these little blemishes on your credit report are simple to clean up, and this will help you immensely during the mortgage process.
Find out the down payment needed for your new home. When it comes to buying your dream home, you can never be too prepared or informed. Your down payment will generally be determined based on the purchase price of the home, your particular financial situation, and the type of mortgage you end up choosing.
Get preapproved for a loan. Before you seriously shop around for your dream home, you should get prequalified or preapproved for a loan. This will give you a sense of security while looking at different homes, as well as an advantage among competing buyers. When you know the amount that a lender is willing to give you before you shop for homes, you will be able to narrow your choices and focus solely on the homes that you can afford.