How To Fill Out the Uniform Residential Loan Application

Most of the mortgage lenders and brokers use the uniform residential loan application to collect the required data from potential home purchasers. Many lenders use the standardize document.

Some vendors may help you fill out this form while others may expect you to do it yourself. Whoever fills out the form for you you need to ensure that the information on the form is correct and accurate.

Ultimately it is you who is responsible for the truthfulness of the application since you are the one who is going to be signing on it.

Main sections of the uniform residential loan application

1) Type of mortgage and term of loan

The first section of this form contains information about the mortgage terms and conditions. The amount being borrowed, the interest rate, the term of the mortgage and the type of the mortgage (ARM/FRM) get a mention here.
If you are unsure of these points at the time of filling out the form you can leave them blank and the lender will fill them out for you. Your mortgage lender or broker will complete the agency case number.

2) Property information and purpose of loan

Mortgage lenders will want to know the nature of the property being purchased. They would also want to know why you are borrowing the money. In this section you provide the address and the description of the property, which simply means the block, and lot number of the property.

This information can be found on the preliminary title report, which you your real estate agent and your mortgage lender should have. This is given to you soon after you have signed a purchase agreement if you’re buying a property.

For refinance situation the lender already has access to this information.

The information that you include in the purpose of loan section indicates to the lender whether you are planning to use the mortgage to buy a home, refinance existing home or constructing a home. The lender will also want to know whether the property you are buying is your primary or a second residence or you are buying it for investment purpose.

The purpose you cite for taking the loan will effect the terms and conditions as well.

uniform home loan application

The mortgage lender usually considers loans given out for investment properties to be riskier than primary residences because they are presumed to be less important to a homeowner than his primary residence.

For this reason the interest-rate on second residences and investment properties is higher.

You may be tempted and might even be advised by your broker and other people to lie on this aspect of your application. However, you should be aware that you can easily get caught if you falsify information.

Even after closing on loan purchase the loan lenders can ask for proof such as a copy of the utility billing in your name to prove that you are living in the property. Lenders have even been known to send a representative to the house to see who is living in the property.

When you plan for the mortgage you must declare the way you hold the title to the property as a single owner, joint holder or joint tenant and so forth.

The lender will also want to know the source of the money from which you are making the down payment. Lenders are most comfortable if this payment comes from your personal financial resources. If the money has been borrowed, it is liable to increase  the burden of debt and interfere with your ability to pay the mortgage loan in the future.

In this section as well you are best off telling the truth because lenders always ask for bank account statements for the past few months as well as investment account statements.

Any money borrowed from relatives and friends will show up. If you are receiving money from a relative as a gift to be used for down payment, have them write a short note for the broker. The lenders provide a standardized gift letter format confirming that the money is a gift and does not have to be re-paid.

In spite of this letter the lenders are suspicious about such payments.

3) Borrower information

This section of the loan application will require you to provide personal details about yourself as well as any person cosigning with you on your loan application.

Years of education gets a mention. If you graduated from high school you have 12 years of schooling. 2 to 4 years of college education can be added to that. This information usually does not affect the lender’s decision to give or not give you the loan.

Lender also wants to know the address of the 2 prior residences you have recently stayed in. If you have been in your recent residence for the past two years you will not need to list your two prior residences. Lenders are looking for stability here.

Lenders will request a letter from a landlord to verify that you’ve paid your rent in a timely fashion. If you have moved recently lenders may also check the previous landlords. If you have made your payments in time you should be all right but if you haven’t you can explain yourself either by separate letter or in the blank space on page 3 or 4 of the application.

4) Employment information

Your employment history is an important factor in your mortgage application. Unless you’re independently wealthy, your employment history and your income will determine your ability to meet the payment obligation of the mortgage. Lenders are looking at candidates who can show stability with the job and future income.

If you have held your job for at least two years that his only position that you need to mention. If you work more than one job, you need to mention each one separately. If there have been more than one employers in the past two years you should list them as well.

Mortgage lenders are aware of the fact that in the current economic scenario many people change jobs. You might want to avoid showing many changes to make your application look good. If you have a job for a very short period of time you might want to avoid mentioning that on the mortgage application. You may also be tempted to cover a gap in employment because you want your application to look positive.

While it is not necessary to list every single employment position out in this section, you should be aware that your mortgage lenders will check the informations with your previous employers. It is usually better to disclose employment job changes in your application rather than have the mortgage lender discover it himself.

The lenders usually don’t mind some job-hopping. If they see frequent job changes, they might ask that you current lender fill out the ‘prospects for continued employment’ section of the ‘verification of employment request’.

This section also asks the applicant to list off their monthly income from prior jobs. You do not provide a monthly income from your current job here because it’s provided in the next section of the application.

You may also wonder why you are required to provide your current employers contact details. Shortly before your loan is ready to close the lender may call your current employer to verify that you’re still employed but the verification of employment is usually done through the current pay stubs and W-2s.

It is highly unlikely that the lender will call any of your previous employers unless he needs to verify some employment information on your application.

5) Monthly income and housing expense projections

Section 5 of this application determines the fate of most mortgage applications. Here you list your monthly income including your amount derived from investment such as bank, stock and mutual fund account as well as any bonus or commissions.

Most people’s employment income determines ability to borrow. If your income differs from month to month simply enter your average monthly income for the past 12 months. Some vendors use a 24 month average if you are self-employed.

6) Rental Income

Rental property is property that you bought for the purpose of renting it out. If you have other income sources such as child support or alimony should list them on the other line and describe them in this section. The more income you show the more likely you are to qualify for the mortgage.

7) Assets and liabilities

In this section you present your personal balance sheet which summarizes your assets and liabilities. The assets are subdivided into liquid assets and non-liquid such as real estate. Liabilities are any loans of debts that you have outstanding. The more of these obligations the more unwilling mortgage lenders may be to lend you a large sum of money.

It is a good idea to reduce your debt to income ratio before you apply for a mortgage. If you can pay off your high consumer debts such as credit card and automobile loans, you should consider doing that now. These debts usually carry high interest rate and can hurt your chances for qualifying for a mortgage.

8) Details of transactions

In this section you will detail the terms of the proposed home purchase or refinance. The purpose of the first part of this section is to calculate the cost of the home, including closing costs. After you subtract the expected loan amount, this column shows you the amount of money you need to come up with to close on the home purchase.

9) Declarations

This section contains some of the questions the lender needs to ask. If you say yes to any of these questions you can explain yourself on a separate page or in the blanks page on page 4 of the application. Just because you answer yes to any of the questions it does not mean your application will immediately get denied.

10) Acknowledgment and agreement

This is the section where you cross check and confirm that the information provided by you is true and accurate. If you haven’t been completely honest on your mortgage loan application this is your last chance to rethink and correct what you are doing.

If you have had someone else fill out the form for you, you need to make sure that the answers are correct before you sign the agreement. Now is the time to question yourself and ensure that you presented your information in the truthful light.

11) Information for government purposes

You may skip this section since it’s optional. It is used to track discrimination practices by the lender and to see if the lender does in fact discriminate on the basis of race, ethnicity and other non-financial factors.

12) Continuation Sheet (Page 3)

On the continuation sheet on page 3 of the uniform residential loan application you will find largely an empty blank page. This is for giving additional information that could not fit anywhere else in the mortgage application form.

This is where you explain the blemishes on your credit report, reasons for job changes etc. If you don’t have anything to put on this page for you should draw a line across it so that the lender knows you have nothing to say. Be sure to sign on the bottom of this page as well even if you do not write anything on it.

 

Why Mortgage Lenders Require Extensive Paperwork

The reasons that mortgage lenders need such extensive information about your finances to be satisfied about your ability to pay off the mortgage loan. You submit these documents to prove and substantiate your current financial status not only to the mortgage lender but also subsequently to other organizations that may buy your mortgage if the lender sells your mortgage in the second market, as many of them do. Pay stubs, tax returns and investment statements help document your income and assets. The lender assesses the risk of lending the money and how much they can lend you based on your financial stability.

The lenders cannot just take the word of the borrower because they have no way of knowing who is honest and who is not. The result is that lenders have to assume that all loan applications may lie given the opportunity.

You should not consider lying on your mortgage loan application. Although even some mortgage brokers in the quest to close more loans and more commissions may even advise buyers to do so, it is not a good idea. The number one reason why it is not a good idea is because you are very likely to get caught. One example of the way people cheat on their mortgage on application is by creating bogus tax returns with inflated incomes. The mortgage lender has several methods in which to trip you if you lie. If the mortgage is able to determine that you are lying on a mortgage application your application will get denied, anyway. in case you do not fit in the criteria of the lender to qualify for a mortgage on it, maybe it is for your own good. Mortgage lenders have a smart way of figuring out whether you can really afford to take on the home loan without the risk of foreclosure in the future or not. If the lender does not think you are an adequate risk, then perhaps you should wait for some more time and build up your financial resources before you take on the additional burden of mortgage.

Falsifying loan documents is committing perjury and fraud is not something you want to do. When you sign the IRS 4506 form, it allows the lender to request directly from the IRS copies of the actual tax returns that you filed. Falsifying your income on the application will be caught.

Even if you do lie on your application and get approved for more that you can really afford, you are liable to face foreclosure in the future and if not, the burden of debt can be severe if you have borrowed more than you can actually afford. If you’re short on a down payment alternatives are always available.

List of Documents and Paperwork Required by a Mortgage Lender

In order for a mortgage can do to make accurate assessment of your current fund situation he is going to need the details. The approval of mortgage loan hinges on this aspect. The mortgage lenders generally ask you to sign a form authorizing and permitting them to make inquiries from your employers as well as making a request for your credit report. Mortgage lenders provide you with an incredibly lengthy list of documents that require the mortgage applications. These usually include the following:

Pay stubs for the most recent 30 consecutive days

Two most recent w-2 forms

Two most recent years federal income tax returns

Signed IRS form 4506 — the request for transcript of tax return

Up-to-date profit and loss statement and current balance sheet if you’re self-employed

Copies of past two months bank and investment account statements

Recent statements of all outstanding mortgages

Copy of declarations pages for homeowner’s insurance policies in force

Home purchase contract

Rental agreement for all rental properties

Divorce decrees

The federal and state tax returns for the past two years

Partnership federal tax returns for the past two years

Condo or homeowner association documentation

Title report, appraisal and survey report

Property inspection report and pest control inspection report

Receipts for deposit

This is a comprehensive list of what a mortgage lender can possibly ask for you. However, in most likely cases not all of the items will apply to you.

Introducing other typical documents

There are some other common forms that you are likely to find with different lenders. All mortgage lenders and brokers have some individual requirements that they might be need you to fill.

You should get a legal notice of your right to receive a copy of the credit report if you have paid for it. You can always request the appraisal report from the mortgage lender. In case your verbal requests get ignored you may resort to a more formal written application request for your appraisal report within 90 days of the rendering of a decision to approve or reject your loan.

Home Appraisals are useful documents to have in your file and you never know when they may come in handy. You will also know what properties were used to compare with yours in order to discover how appropriate the cost your home was.

Equal Credit Opportunity act is a federal law that a mortgage lender may not reject a mortgage application because of non-financial personal characteristics such as race, gender, marital status, agents of both. You also do not need to disclose income that you receive as a result of being divorced. However, listing out as much income as possible on a home loan application can improve the chances getting qualified for the amount of money that you want to borrow. If you have any reason to believe that the lender is discriminating against you you can contact and file a complaint with the state Department of national institutions, Department of real estate or whatever state division monitors the functioning of mortgage lenders in your state.

What Income Proofs Does a Mortgage Lender Require

Whether you are in a job, run a business, are self-employed or have inheritance the bottom line in getting a mortgage loan is to be able to prove a source of income to your lender.

In case you’re employed you will probably be required to produce written evidence such as pay slips or a statement of income for the past two years. Verification and confirmation of your income may also be required from your employer. Uncertain and irregular income such as commission, bonuses etc are not considered by a majority of the mortgage lenders.  There may be a few exceptions if you can demonstrate a certain regularity in the irregular pattern of these monetary gains.

In case you are self-employed you will again need to provide a proof of an income which will usually be in the form of a statement of your audited business accounts.

Proving a regularity and pattern in income may be difficult for a person who has just started out in the business recently.  But letter of confirmation from your accountant, audited statement of your accounts along with bank account statements for the last three years should prove to be satisfactory enough to get approval for the mortgage loan.

The bottom line is that you should be able to prove certain financial security and regularity for the future.  Whether this comes from a business job or inheritance is immaterial as long as you can satisfy the lender as to your ability to make the monthly installments on the mortgage.