At first the process of applying for a mortgage may seem somewhat daunting. The process of applying for a mortgage loan is actually relatively straight forward. The difficulty typically lies in the applicant gathering together the necessary information and documentation to support their mortgage application.
Individuals who are organized and keep good records should have little trouble pulling together the necessary supporting documentation. Individuals who are not organized, or who do not save pay stubs and account statements, may have to spend more time collecting together the necessary documentation.
The process of applying for a mortgage starts with filling out the mortgage application. This may be done in one of several ways:
Information Needed for a Mortgage Application
Regardless of the means by which the application is filled out, the borrower will need to have certain information in order to complete the application. This information includes:
Along with the mortgage application, the borrower should be prepared to sign a great deal of additional paperwork, which may include all, some, or more than the following, depending on state regulations:
For the "typical" mortgage application, a great deal of supporting documentation must be provided. This documentation includes (but may not be limited to):
An individual's particular situation may dictate additional documentation requirements. A divorced individual who pays or receives alimony will be asked to provide a copy of the divorce decree documenting the alimony. It is also common during the application and underwriting process for a lender to ask for additional documentation in support of a particular part of the application.
Certain loans may require less or no documentation, may not verify assets, may even not verify employment. Self employed individuals and individuals for whom documenting income may be difficult or too much of a bother may seek out these types of loans to simplify the application process. For these loans, little or no supporting documentation is provided. Borrowers usually pay a higher interest rate for the convenience of low and no documentation loans.
Reasons an Application May Not be Approved
There are many reasons that a loan application may not be improved. These can include:
If a borrower's application is turned down, federal law requires the lender to tell them, in writing, the specific reasons for the denial. The borrower should make sure that they understand the reasons given. Understanding the reasons may allow them to find answers or alternatives that will satisfy the lender's lending standards or help to improve their chances with another lender.
Options if a Loan Application is Not Approved
For an individual who has their mortgage application declined, there are many options, which can include: