Employment:
Your ability to make the monthly payments on the mortgage and to afford the costs associated
with owning a home are primary considerations in our loan approval process and should be your
primarty concern. A two year work history is required to apply for a mortgage unless you have
been in school part or all of that time. If you have changed jobs frequently, it needs to be in a
related field. If you are self-employed you will need to produce two years tax returns to verify a
two hear history of the business. If you have a partnership or corporation, additional tax returns
and schedules will be required.
Income:
You must be able to prove that you have enought stable monthly income to make your mortgage
payment and pay other required monthly obligations. Other obligations that the lender will
consider are installment loans, student loans, and monthly credit card minimums. A monthly
mortgage payment will include: principle, interest, real estate taxes, homeowner's insurance,
and in some cases, monthly mortgage insurance.
You will need to document your monthly income. Whether you are self-employed, commissioned,
or receive a salary or wages will determine the paperwork you will need to supply your lender.
Paperwork for Loan Appliction
Credit:
Credit scores play a very important part in qualifying for a loan. There are three repositories
of credit: Equifax, Transunion, and Experian. Each gives a score for your credit unless that
particular repository does not have enough information to produce a score. A mortgage credit
report merges the information from each repository into one report. A mortgage credit report is
different from a consumer or auto credit report. A buyer needs to show 12-24 months history
on several credit lines depending on the kind of mortgage program. Late pays, collections,
judgments, tax liens, foreclosures, and repossessions will all have a derogatory impact on credit
scores.
See How Credit Scores Affect Your Mortgage Rate for the impact of low scores on your interest rate.
Money to Put Down and Your Personal Assets
To buy a home there are costs for down-payment and closing costs. Different types of loan programs
have different percentages required for down-payment. For example: An FHA loan only requires 3.5%
for a down-payment.
We will look for the source of funds with which you will make the down payment and pay closing
cost and fees. Gifts from a relative, church, employer, municipality, or non-profit organization may
sometimes be used, but must be verified in writing. In some cases, the donor must be a relative
and must provide a letter stating the donor’s relationship to you, the amount of the gift, and the fact
that no repayment is expected. Receipt of the gift funds must also be verified.
A detailed listing of your personal assets is required on the loan application form. You will need
to have the following information available to complete the form:
1. All bank accounts, both checking and savings, and money market accounts with the name and a
ddress of the institution(s), names(s) on the accounts, account numbers, and current account balances;
2. Recent bank statements for at least two months;
3.Current market value of stocks, bonds CDs and other investments;
4.Vested interests in all retirement funds;
5. Face amount and cash value of insurance policies in force;
6. Make, model, year, and value of automobiles owned;
7. Address and market value of all real estate owned, along with the amount of rents collected, the
mortgage on the property, the monthly mortgage payments, and list of monthly expenses for investment
properties; and
8. Value of other personal property such as furniture.
As with the Verification of Employment, each of the institutions where you have savings or checking
accounts will be verified. Differences between the account balances reported by the institution and the
balance you give for the loan application will have to be reconciled, so be sure you have your correct
current balances. Any recent large deposits will need to be explained.