Mortgage Application Information

A mortgage allows a borrower to finance a house purchase or refinance.

To procure a mortgage, a borrower has to fill out the Uniform Residential Loan Application, also called a "1003." This application gives a mortgage lender a snapshot of the borrower's overall financial situation and helps him determine if the borrower qualifies and which program is best suited to his needs.

Significance

The Uniform Residential Loan Application requires a borrower to state all of his identifying information, such as full legal name, date of birth, social security number, as well as a full two-year address history. This helps a lender verify the borrower's identity and prove there is no identity theft in the transaction. Additionally, the application requires the borrower to list the property to be purchased or refinanced in the first section of the application.

Function

The assets, income and employment history required on the form give the lender a quick view of a borrower's financial situation. He is able to quickly see if the borrower has steady income, a solid reserve fund in the event of emergency, as well as continued employment over a full two-year period.

Types of Assets

The types of assets listed on the application range from checking and savings accounts to retirement accounts to life insurance. A borrower can additionally list any other type of assets including cars, boats, jewelry, antiques or other property not included in the transaction. Back up documentation is needed for each asset, including but not limited to bank statements, pay stubs and income tax returns.

Considerations

The more completely the borrower fills out the application, the faster the lender determines the approval or denial of the application. First and foremost, the lender needs the full legal name, address, date of birth and social security number of the borrower to pull his credit report and score. Typically, credit history is the biggest factor in approval or denial of a mortgage.

Misconceptions

Borrowers typically miss items in the liabilities section of the application, assuming that only regularly occurring monthly debts, such as car and student loans, have to be listed. However, credit cards have to be listed, even when paying the balance in full each month. Child support and alimony must be listed as well. Failure to list all liabilities could result in a denial later on in the process.

References

• Federal Reserve: "Understanding the Home Mortgage Process"
• US Bank Rate: Mortgage Documentation Checklist

Resources

• Fannie Mae: Uniform Residential Loan Application