The ins and outs of applying for a mortgage
Julie Garton-Good, GRI, DREI

There are some things in life that may be more wonderful the second time around. But if it's been years since you've prepared for a mortgage loan interview, you may need some coaching. Lender practices have changed and streamlined, and you need to be armed with facts, figures, and information when you first visit the lender. Let's explore what you'll need to pull together to "wow" the lender when applying for a new mortgage loan.

There are five categories of information you'll provide the lender. The first is basic information about you.. This will include your social security number, date of birth, home phone number, marital status, number of dependents, and the number of years you attended school. Next you'll be asked for your current address and anywhere else you've lived during the past two years.

The second category of information is about your employment. Here you'll need to give the name, address and phone number of your current employer and information about other jobs you've held in the past two years. In addition, you'll be asked to list the type of work as well as the position. If you've had prior positions in this line of work, you'll need to give your salary amount for those jobs. The lender needs information on these first two categories, personal and employment, in order to verify that you are the person you say you are; but this will also help determine that your life is stable and that you take your responsibilities seriously.

The third category of information deals with your income and assets. You'll be asked to give your gross monthly income (which could include overtime, bonuses, commissions and any net rental income). If you receive alimony, child support or separate maintenance income, that can also be considered if you so desire.

Next comes a detailed account of your assets. The lender will need the account numbers for savings accounts, CDs, bonds, life insurance policies. They'll also require information about tangible assets such as boats and motor homes. Borrowers often wonder why this question comes up--but it's for a good reason. The lender can determine how well a borrower accumulates assets and can see that you have other financial resources besides what you're using for the down payment (which may be the equity from your previous home.) It says a lot about your financial stability.

The lender needs to know about other real estate you own, too. The equity in that property may be viewed as an asset in your financial picture. Next the lender will ask you about the least-favorite area of your financial picture--your debts. This is absolutely not the time to "forget" that you owe a debt--the thorough process that the lender uses will more than likely uncover the true story. In fact, you will be asked to sign the loan application stating that you have told the truth. The penalty for not disclosing information is stiff--including federal fines, imprisonment or both.

So what debts do you disclose? When in doubt, spell them out! These include credit card accounts, installment loans, like car payments, student loans--even loans you've signed as a co-borrower or a co-signer. Based on the size of the obligation (and the payment time remaining), the lender will determine if these affect your qualifying picture. The lender will need to know how much you owe, how much you pay monthly, the account numbers and where payments are made.

The fifth category of information has to do with the house you've selected. If your offer has been accepted on a home, you'll need to provide the lender with a copy of the purchase agreement. This should show the street address, legal description, as well as the names under which you'll take title. If you're applying for a construction loan, you'll need even more information about the lot, the plans and any outstanding loans on the property.

Lastly, the lender will want information about the sale of your previous home as well as when it's closing. Be prepared to tell the lender approximately how much you'll net from the sale, when the closing is scheduled to occur, and the name of the person handling the sale.

Well, there you have it--a bird'seye view of just what you need to round up for your next mortgage loan application. Don't panic if you don't have everything we've mentioned when you first visit the lender. But if you do, you'll find that the loan processing time may be trimmed and purchasing your new home will be much smoother and less stressful.