How to Read a Loan Application
Page 1 of 4 of the 1003 is:
I. TYPE OF MORTGAGE AND LOAN TERMS
Now let’s read this section. This section is about the types of mortgage and what the terms of the loan are. Check mark the box for a – VA, FHA, Conventional, USDA/Rural Housing Service or Other (with Explanation). The Agency Case Number and the Lender Case number you don’t need to fill out. Reading Section I. from left to right starts with Loan amount, Interest rate, and number of months. These should all be negotiated with the mortgage professional. Make sure you check the Amortization Type – Fixed Rate, GPM, Other, or ARM.
II. PROPERTY INFORMATION AND PURPOSE OF LOAN
Reading section II. Make sure you start with the “Subject Property” the property you are financing. Fill in the address, units (if more than one – apartment building) and the year built. The purpose of the loan – Purchase, Refinance, Construction, Construction-Permanent, Other with explanation. The lender will need to know so please check if the property will be your Primary Residence, Secondary Residene or Investment property. Don’t try and cheat the system by calling your investment property a primary or secondary home to get the lower interest rate it will make matters worse if you are not honest. Trust me, you could lose your deposit if you are not honest.
If you are financing a current address you own than fill in the information about – Year Acquired, Original Cost, Amount of Existing Liens, Present Value (your guess if you don’t have an appraisal), Cost of Improvements.
Fill in how you want the title to be held and the names on the title. The title can be different than who is on the mortgage. Title is a document that shows the owners of the property, and you don’t have to be part of the mortgage payment to be an owner if other parties agree.
“Source of down payment and charges”. The lender needs to know where the funds are coming from, so make sure you can prove the funds are in that account. “Mattress Money” will not be acceptable or “cash laying around the house” won’t work either.
III. BORROWER INFORMATION
Reading section III. In this section you need to fill out both sides if there is a co-borrower. The lender may determine who the borrower is and who the co-borrower is if you want. Choosing can make a difference in what mortgage interest rate you get, because the borrower has more weight in credit, so if the borrower has better credit it could mean lower payment. If it’s important for someone to be borrower than that is just fine too.
Reading the section III is about putting your name, social security number, home phone, date of birth, and years in school. The next step is your marital status – check the box for either – Married, Separated, Unmarried. Put the number of dependants (see tax IRS tax info to determine dependants) and their ages. You need to put your address information of where you currently live and if you own or rent the property and for how long. If you have been at that address less than two years, than put the previous address in the next section of boxes.
IV. EMPLOYMENT INFORMATION
Reading section IV of the 1003. Again, this section needs to be filled out by the co-borrower as well if there is one. The employment information is important for qualifying for a mortgage. Start by putting the employer information – Name and Address of the company (self employment is ok. just check the box in the corner), position you hold at the company for how long and how long in that profession. Put the phone number too, because they may need to verify information with that employer later.
Like the housing information, if you have been employed at that company for less than two years put your previous employer information in the boxes below the current employer.
Page 2 of 4 of the 1003
V. MONTHLY INCOME AND COMBINED HOUSING EXPENESE INFORMATION
Reading section V. of the 1003. This is also a very important section to fill out properly because your interest rate is partly based on this section. You don’t have to fill out this section if your loan program doesn’t require you to state your income. Fill out your employer monthly income, overtime monthly income, any bonus or commission monthly income (if separate from base employer income). Any investment income gets included in it’s own category boxes. There’s a section just below for any other income like alimony, child support, or other. Remember this is all filled out on a monthly basis.
VI. ASSETS AND LIABILITIES
Reading section VI of the 1003.
The left side: Putting down all the assets you and the co-borrower have is important for qualification purposes. In the boxes please put thee name of the institution that holds your assets and the account number associated to you and the institution. Estimated the account value is ok. You might have to show proof of funds for a month or two. You will most likely have to submit your monthly statements to your lender or broker. There’s plenty of space to put many accounts in, but please ask the broker or lender for an additional page if you need it. Your automobile will be listed down near the bottom of the page as well as putting any other assets not listed with a account number. The right side.
The right side: on the right side of this page you put down you and the co-borrowers liabilities with the name of the lender and the amount of the monthly liability associated with that loan. You can guess the amount of the total unpaid balance if you don’t know the exact amount. The lender will import that information from your credit report later.
Page 3 of 4 of the 1003
Reading section VII (cont.) of the 1003. Put all the real estate pending, sold, or rental that you own in this section. The sold property is important if you just recently sold the property, but the loan is still recorded on the credit report. Fill in the type of property, present market value ( ok to estimate), Amount of Mortgage & Liens (seconds, HELOC’s, taxes etc.). Gross Rental income (if rented), Mortgage payment, Insurance, Maintenance, and taxes. Estimates for all these boxes are acceptable. Final numbers will be inserted later.
VII. DETAIL OF TRANSACTION (RIGHT SIDE)
Reading section VII of the 1003. Don’t worry about filling out this information, because the lender or mortgage professional should fill in this for you based on other loan document factors like the “Good Faith Estimate”.
VIII. DECLARATIONS
Reading section VIII of the 1003. Declarations section needs to be filled out by you and can’t be filled out by the mortgage broker. Make sure you check a box either “yes” or “no” for each questioned asked.
IX. ACKNOWLEDGMENT AND AGREEMENT
Reading section IX of the 1003. Please make sure you read, sign and date the signature box.
X. INFORMATION FOR GOVERNMENT MONITORING PURPOSES
Reading section X of the 1003. You and the co-borrower (if applicable) will have to check a box in each section to help the government monitor lenders for discrimination against people applying for a loan. You need to identify your ethnicity, race, and sex. You may wish to not furnish this information too, just check mark that appropriate box.
Page 4 or 4 of the 1003
Just fill in this page if you need more room for additional liabilities and assets.
I. TYPE OF MORTGAGE AND LOAN TERMS
Now let’s read this section. This section is about the types of mortgage and what the terms of the loan are. Check mark the box for a – VA, FHA, Conventional, USDA/Rural Housing Service or Other (with Explanation). The Agency Case Number and the Lender Case number you don’t need to fill out. Reading Section I. from left to right starts with Loan amount, Interest rate, and number of months. These should all be negotiated with the mortgage professional. Make sure you check the Amortization Type – Fixed Rate, GPM, Other, or ARM.
II. PROPERTY INFORMATION AND PURPOSE OF LOAN
Reading section II. Make sure you start with the “Subject Property” the property you are financing. Fill in the address, units (if more than one – apartment building) and the year built. The purpose of the loan – Purchase, Refinance, Construction, Construction-Permanent, Other with explanation. The lender will need to know so please check if the property will be your Primary Residence, Secondary Residene or Investment property. Don’t try and cheat the system by calling your investment property a primary or secondary home to get the lower interest rate it will make matters worse if you are not honest. Trust me, you could lose your deposit if you are not honest.
If you are financing a current address you own than fill in the information about – Year Acquired, Original Cost, Amount of Existing Liens, Present Value (your guess if you don’t have an appraisal), Cost of Improvements.
Fill in how you want the title to be held and the names on the title. The title can be different than who is on the mortgage. Title is a document that shows the owners of the property, and you don’t have to be part of the mortgage payment to be an owner if other parties agree.
“Source of down payment and charges”. The lender needs to know where the funds are coming from, so make sure you can prove the funds are in that account. “Mattress Money” will not be acceptable or “cash laying around the house” won’t work either.
III. BORROWER INFORMATION
Reading section III. In this section you need to fill out both sides if there is a co-borrower. The lender may determine who the borrower is and who the co-borrower is if you want. Choosing can make a difference in what mortgage interest rate you get, because the borrower has more weight in credit, so if the borrower has better credit it could mean lower payment. If it’s important for someone to be borrower than that is just fine too.
Reading the section III is about putting your name, social security number, home phone, date of birth, and years in school. The next step is your marital status – check the box for either – Married, Separated, Unmarried. Put the number of dependants (see tax IRS tax info to determine dependants) and their ages. You need to put your address information of where you currently live and if you own or rent the property and for how long. If you have been at that address less than two years, than put the previous address in the next section of boxes.
IV. EMPLOYMENT INFORMATION
Reading section IV of the 1003. Again, this section needs to be filled out by the co-borrower as well if there is one. The employment information is important for qualifying for a mortgage. Start by putting the employer information – Name and Address of the company (self employment is ok. just check the box in the corner), position you hold at the company for how long and how long in that profession. Put the phone number too, because they may need to verify information with that employer later.
Like the housing information, if you have been employed at that company for less than two years put your previous employer information in the boxes below the current employer.
Page 2 of 4 of the 1003
V. MONTHLY INCOME AND COMBINED HOUSING EXPENESE INFORMATION
Reading section V. of the 1003. This is also a very important section to fill out properly because your interest rate is partly based on this section. You don’t have to fill out this section if your loan program doesn’t require you to state your income. Fill out your employer monthly income, overtime monthly income, any bonus or commission monthly income (if separate from base employer income). Any investment income gets included in it’s own category boxes. There’s a section just below for any other income like alimony, child support, or other. Remember this is all filled out on a monthly basis.
VI. ASSETS AND LIABILITIES
Reading section VI of the 1003.
The left side: Putting down all the assets you and the co-borrower have is important for qualification purposes. In the boxes please put thee name of the institution that holds your assets and the account number associated to you and the institution. Estimated the account value is ok. You might have to show proof of funds for a month or two. You will most likely have to submit your monthly statements to your lender or broker. There’s plenty of space to put many accounts in, but please ask the broker or lender for an additional page if you need it. Your automobile will be listed down near the bottom of the page as well as putting any other assets not listed with a account number. The right side.
The right side: on the right side of this page you put down you and the co-borrowers liabilities with the name of the lender and the amount of the monthly liability associated with that loan. You can guess the amount of the total unpaid balance if you don’t know the exact amount. The lender will import that information from your credit report later.
Page 3 of 4 of the 1003
Reading section VII (cont.) of the 1003. Put all the real estate pending, sold, or rental that you own in this section. The sold property is important if you just recently sold the property, but the loan is still recorded on the credit report. Fill in the type of property, present market value ( ok to estimate), Amount of Mortgage & Liens (seconds, HELOC’s, taxes etc.). Gross Rental income (if rented), Mortgage payment, Insurance, Maintenance, and taxes. Estimates for all these boxes are acceptable. Final numbers will be inserted later.
VII. DETAIL OF TRANSACTION (RIGHT SIDE)
Reading section VII of the 1003. Don’t worry about filling out this information, because the lender or mortgage professional should fill in this for you based on other loan document factors like the “Good Faith Estimate”.
VIII. DECLARATIONS
Reading section VIII of the 1003. Declarations section needs to be filled out by you and can’t be filled out by the mortgage broker. Make sure you check a box either “yes” or “no” for each questioned asked.
IX. ACKNOWLEDGMENT AND AGREEMENT
Reading section IX of the 1003. Please make sure you read, sign and date the signature box.
X. INFORMATION FOR GOVERNMENT MONITORING PURPOSES
Reading section X of the 1003. You and the co-borrower (if applicable) will have to check a box in each section to help the government monitor lenders for discrimination against people applying for a loan. You need to identify your ethnicity, race, and sex. You may wish to not furnish this information too, just check mark that appropriate box.
Page 4 or 4 of the 1003
Just fill in this page if you need more room for additional liabilities and assets.