The Mortgage Process

The Application
You will need to provide your lender with the following:

  • Two-year history of employment and verification of all income sources.
  • If self-employed, copies of past two years Federal Income Tax Returns.
  • Information and perhaps statements from your checking, savings, credit card and retirement accounts.
  • Name, account number and outstanding balance of each of your debts.
  • Information about any assets.
  • Information and documentation regarding any other assets that will be used as funds to close, gifts etc..
  • If for an FHA Loan – Copy of Social Security card and photo ID.
  • If for a VA Loan – Certificate of Eligibility or DD214.

Some questions for your lender might be:

Are both fixed-rate and adjustable mortgage loans available, and which best suits my goals?

What is the interest rate, and how do discount  points affect it?

How long can I “lock-in” the financing at the current interest rate?

Is a float down lock available in case rates drop after I have locked in?

Are there any other fees you may charge me in conjunction with my loan?

On adjustable loans:

  • How often will the interest rate be adjusted?
  • Is there a maximum limit on each rate change?
  • How often will the monthly payment be adjusted?
  • Is there a ceiling on payment adjustments?
  • What is the maximum rate that can be charged over the life of the loan?

Is there a pre-payment penalty clause? This involves extra charges for paying off the loan before maturity. About 80% of all loans in the United States are paid off early.

What is the “grace” period? How late can a monthly payment be made before a late charge is assessed? What will happen if a payment is missed?

Is the mortgage assumable, could a buyer assume it at the same rate?

Do you have to pay “points” to get your new mortgage? Lenders often charge points for the cost of giving you a mortgage loan. A “point” is 1% of the loan. It can also affect the APR.

Will the lender require mortgage insurance?

Is the loan serviced locally or is the servicing sold?  Does this concern me or do I not care?

Ask for a written “good faith estimate”.