December 22, 2024 9:08 AM in Menlo Park, CA
Loan Forms and the Loan Process Explained
Your mortgage loan will begin with you completing and/or digitally signing several loan forms. We will send these to you, but you can get an advance look by clicking on the links on this page.
The loan forms, along with your loan file exhibits (such as a pay stub or W2) allows the loan underwritere to make a decision. Keep in mind that your initial forms are not a contract, they do not bind you or the lender to a particular loan program, rate, or amount. The purpose of the initial loan forms is to get your application moving forward so that the more important decisions, such as the rate lock, can be made by you.
Below is a list of the most common forms, and an explanation about each one.
The Loan Application contains a summary of your loan request and the data the underwriter will use to make his or her decision. This initial loan application does not have to be ultra precise, but rather should be a good faith effort on the part of the you to provide enough information to the underwriter to make an informed decision.
The Appraisal Disclosure informs you that you may be charged a non-refundable appraisal fee, and that you will receive a copy of your home appraisal.
The 4506-T allows the lender to obtain a transcript which summarizes your most recent two years of Federal Tax data.
The Credit Authorization allows us, and sometimes the lender or escrow officer, to obtain information related to your credit history, mortgage pay-off, or employment.
The Fair Lending Notice discloses the fact that we do not discriminate against any borrowers.
The Patriot Act Notice lets you know that we will need to verify your identity - usually via your drivers license.
The Good Faith Estimate is an initial look at your loan terms and fees. This is not a contract and does not need to be signed or returned.
The Anti-Steering Notice lets you know that you have more than one loan option from which to choose.
The Broker Fee Disclosure informs you that the lender will pay us upon the closing of your mortgage loan.
The above forms, along with items such as the ones listed below, make up a loan application file.
W2 Forms
Paystubs
Federal Tax returns, if applicable (usually for self employed applicants)
Bank statements to show liquidity and reserves
Photo ID
Evidence of homeowners insurance
We will add additional items to your loan file as your file moves through the process
Credit report
Title report
Appraisal
Here are some things that may occur with your help, or occur behind the scenes as your file progresses
The appraiser may have to repair errors if any appear on your appraisal
Appraisals are reviewed for quality control before they are released to the loan underwriter. While not common, sometimes appraisers make mistakes and/or are required to provide additional data to support their opinion of value.
An old mortgage lien showing up on your title search will be investigated, and eliminated
On occasion we see an old mortgage loan, which had been paid in full in a previous year, appear on a title report. These are usually easy to verify as paid, and once done, an amended title report is issued.
If you have a home equity line of credit (HELOC), it will need to subordinate to the new mortgage
HELOCs are not uncommon, but they require special handling if you are in the midst of a refinance. We need to contact the HELOC lender, and get permission to refinance the loan that is in front of the HELOC. Why? Because the HELOC has the right to refuse your refinance. It's critical that we get, in writing, the permission of the HELOC lender, even if your HELOC has a zero balance. In nearly all cases, we do.
If you have a Revocable Family Trust, you will complete a Trust Certification Form
This form is completed by you, and we will guide you. In short, it tells the new lender whether your family trust allows you to refinance your property. This is more of a formality than anything, as most trusts allow for a refinance.
If your credit report shows inquiries from creditors, you will write a brief explanation for the inquiry
This is a common occurance. Your credit report will indicate whether any creditors have made an inquiry into your credit file. If yes, you will need to write an explanation for the inquiry, and whether any credit was extended. A common inquiry would be from Mastercard, and a reasonable explanation would be that you received a new credit card.
Your employer will be contacted in order to verify your employment
This happens on every file, for salaried employees. How much information your employer releases is up to your employer, most will verify your employment status, but may choose not to divulge your salary.
The lender will run a follow up credit report, just prior to your new loan funding
The purpose of this is to determine whether you obtained any new obligations while your mortgage loan was in progress. It's best, if possible, to hold off on large purchases such as a car until your mortgage transaction has closed.
Your homeowners insurance agent will be contacted so as to adjust the loss payee clause on your insurance
The old lender must be removed, and the new lender inserted. What if the old lender is the same as the new lender? At a minimum, the new loan number must be referenced.
Your existing mortgage lender will be contacted, to determine the amount of the loan pay-off
Your mortgage lender will respond with what's known as a demand. On this demand is the amount of money required to pay off your existing mortgage, up until the day the pay-off is received. Escrow officers often pad the pay-off by a day or two, which means you will receive a small refund from your old lender.
If you have questions regarding starting a loan application, please utilize our contact page. We respond to 100% of the email we receive, usually within 1 hour. The bottom of our contact page has an area which will generate an email directly to us.
|
|
