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Buying homeFinancing Your HomeDo the Paperwork

Although different lenders use different application forms, many work with the Uniform Residential Loan Application, often called Form 1003. Whether or not your lender uses this form, it shows the typical information that a mortgage application collects.

Section I: Type of Mortgage and Terms of Loan

In this section, you specify the kind of loan you're applying for:

• The type of loan (FHA, VA, conventional, and so on)
• The amount of money you want to borrow
• The interest rate of the loan you're applying for
• The loan's term (in months)
• The amortization type (fixed rate, ARM, and so on)

You've already worked with your mortgage broker or loan officer to get the answers to these questions. Make sure this part of the application matches your understanding of the loan.

Section II: Property Information and Purpose of Loan

In this section, you describe the property and how you intend to use it. Here's what it asks for:

• Details of the property. Give the property's address and a legal description of it. The legal description appears on the deed or property tax records; you can get it from the seller.
• The purpose of the loan. Are you buying or refinancing the house? Will the property be your primary residence, a second home, or an investment?
• Information about title. In this section, give the name (or names) of the title holder and indicate what type of title you'll hold.
• Where you'll get the down payment and closing costs. Explain where your down payment is coming from - personal savings, for example, or a gift from a family member. If you'll get a second mortgage, to help pay for your down payment or closing costs, explain that here.

Section III: Borrower Information

This part's all about you. It's where you - and your co-borrower, if you have one - provide your name, Social Security number, date of birth, and how many years of school you've completed. You also must give your marital status and the number (and ages) of dependents. Finally, you provide your home phone number, current address, and previous address if you've lived in your current home for less than two years.

Section IV: Employment Information

To make sure you've got a stable job and can pay back your loan, the lender needs to know about your current and past employment. This section collects the name, address, and phone number of your current employer. It also asks you to specify its type of business, your position there, how long you've been at this job, and how long you've worked in the same industry. Fill in all this information for yourself and your co-borrower if you've got one. And if you work at more than one job, give the information for all your employment.

If you've held your current job for less than two years, you must also give the same information about the previous job (or jobs) you held during those two years.

If you're self-employed, check the "Self Employed" box in this section and supply the other information (type of business, how long you've been self-employed, and so on) as relevant.

Section V: Monthly Income and Combined Housing Expense Information

This part of the form comprises two sections: one for your household's total monthly income, the other for your expenses:

• Gross monthly income. Here, write down how much money comes into your household each month from employment (salary or base wages), overtime, bonuses, commissions, dividends and interest, rental income, and anything else that regularly brings in money. If you're self-employed, be prepared to attach business-related tax returns and financial statements as supporting documents.
• Combined monthly housing expense. In this part, write down your current housing costs, including rent (if you don't currently own your home), any mortgages, insurance, taxes, homeowners' association dues, and any other monthly charges related to housing. Then estimate how much you expect to pay for those same costs in your new home.

Section VI: Assets and Liabilities

This section presents your financial profile beyond month-to-month in-come and expenses. Assets, the things you own that have value, may be liquid or other property. List these assets:

• Your earnest money deposit
• Checking and savings accounts
• Certificates of deposit
• Stocks and bonds
• Life insurance
• Any real estate you currently own
• Retirement accounts
• The net worth of any businesses you own
• Automobiles
• Other assets (list what they are)

Next come your liabilities - the money you owe. Common liabilities include car loans, student loans, credit card debt, mortgages on other properties, stocks you've pledged to secure a debt, alimony, child support, and recurring job-related expenses that you pay (such as union dues or childcare costs), and so on.

Although it's up to you whether you want to include alimony and child support payments as part of your monthly income if you receive such payments, if you pay alimony or child support, you must include the amount you pay as a liability.

For each debt, list the name and address of the creditor, your account number, how much you pay each month, how much time remains on the loan, and your current balance. If you're selling your current home, mark any debts that the sale will pay off with an asterisk.

If you apply for a loan with a co-borrower, the two of you can fill out this section jointly if you've got significant joint assets and liabilities - such as joint bank accounts or a loan you've taken out together. (This is true whether or not you and the co-borrower are married.) Otherwise, each of you must fill out your own Assets and Liabilities section and provide supporting documentation separately.

Section VII: Details of Transaction

This section details the total cost to buy the house. In the first part, add up all the costs related to the transaction:

• Purchase price
• Alterations, improvements, repairs
• Land (if you're buying the land separately - otherwise, it's included in the purchase price)
• Refinance (if you're refinancing your current home rather than purchasing a new one, this is the amount you're refinancing, including any liens that must be paid off )
• Estimated prepaid items
• Estimated closing costs
• PMI
• Discount (any points you're paying)

From the total of those costs, subtract the loan amount, any secondary financing (such as a second mortgage), any of your closing costs that the seller will pay, and other credits. The result shows an estimate of how much cash you need to come up with for your down payment and closing costs.

Section VIII: Declarations

The first part of this section asks you and your co-borrower to check a box to answer yes or no to a series of questions about your legal and financial situation. If either of you answers yes to any of these questions, you must supply more information about what's going on - such as your alimony agreement (along with a copy of your divorce papers) or the circumstances of a recent bankruptcy (along the schedule you used to repay creditors and the discharge papers).

Here are the questions:

• Are there any outstanding judgments against you? If you've lost a lawsuit and haven't yet paid what you owe, note that here.
• Have you been declared bankrupt within the past 7 years? A recent bankruptcy will make it harder for you to get a loan.
• Have you had property foreclosed upon or given title or deed in lieu thereof in the past 7 years? The lender wants to know if you've been unable to honor the obligations of a mortgage in the recent past.
• Are you a party to a lawsuit? If you're suing someone or being sued, you must give the details of the lawsuit.
• Have you directly or indirectly been obligated on any loan that resulted in foreclosure, transfer of title in lieu of foreclosure, or judgment? This applies to all kinds of loans, not just mortgages, whether you were the primary borrower or a co-signer.
• Are you presently delinquent or in default on any federal debt or any other loan, mortgage, financial obligation, bond, or loan guarantee? If you are, it's not a good time to apply for a mortgage.
• Are you obligated to pay alimony, child support, or separate maintenance? The lender requires details of any divorce or separation agreement under which you must pay money to the other person.
• Are you a co-maker or endorser on a note? A note is a promise to pay a specified amount on demand or at a certain time. If you have such an obligation, the lender wants details.

The second part of this section has two yes-or-no questions, and one question that, if you answer yes, requires further information:

• Are you a U.S. citizen?
• Are you a permanent resident alien?
  
• Do you intend to occupy the property as your primary residence? If yes, you must indicate whether you've owned or partially owned aproperty in the past three years. If you have, you need to give information about the type of property (primary residence, second home, or investment property) and how you held title (by yourself, jointly with your spouse, or with someone who's not your spouse).
  

Section IX: Acknowledgment and Agreement

In this section, you promise that all the information in your application is true and you understand that anything you said that's false could result in penalties, such as a lawsuit or even criminal charges. The rest of the fine print says that you agree to these conditions:

• Everything you state in the application is for the purpose of getting a loan to buy residential property, and if you get the loan you're applying for, it will be secured by a mortgage or a deed of trust.
• You won't use the property you buy with this loan for any illegal purpose, and you'll occupy the property as you state in the application (primary residence, second home, and so on).
• Whether or not your application gets approved, the lender can keep a copy for its records.
• If information you provided on the application changes, you'll update the lender about the change.
• If you get the loan and fall behind in your payments, the lender can report that information to the credit bureaus.
• The lender can sell your loan to someone else.
• The lender isn't responsible for the condition of the property you're buying.
• If you submit the application electronically, your electronic signature is as legally binding as your pen-and-ink signature.

Don't try to fudge - or worse, lie about - anything on the application. That's fraud, and it's against the law. Even if the lender doesn't catch your fibs during the application process, those misstatements can come back to haunt you later. If you lie to get a bigger mortgage than you can afford, for example, and end up in default, the lender may press criminal fraud charges against you.

Section X: Information for Government Monitoring Purposes

The government checks up on lenders to make sure that they're following federal laws about fair housing and equal credit opportunity for certain kinds of loans. That's what this optional section is for. It collects information about your sex, race, and ethnicity that the government uses to check lenders' compliance with those laws. If you prefer not to provide this information, check the box that says, "I do not wish to furnish this information."

If you choose not to give the information requested in this section and you applied for the loan in person, the lender is required by law to look you over, check out your last name - and make a guess about your sex, race, and ethnicity.