How To Fill Out A Loan Application - Complete Walkthrough!

Certified Mortgage Advisor
NMLS 1701021
Published 
July 20, 2020

Overcoming your fear on submitting your loan application

If you're looking to apply for a mortgage, you might be feeling a little bit overwhelmed by actually submitting a loan application. That's the first step that you need to take. When you're looking at getting a mortgage, you're going to submit a loan application with a lender. Usually, a loan officer who you've probably talked to beforehand can feel overwhelming because there are a lot of questions asked and it feels like you're putting all of this personal information out there and you don't know what's going to happen.

So what we're going to do is walk through a real life loan application. Step-by-step so you can understand what's going on, why these questions are being asked. So you can have a better idea of what you're doing and feel a little bit more confident and comfortable moving forward with it.

What is loan application?

First of all, a loan application is a required document by the federal government.

URLA 1003

It's called a URL or Uniform Residential Loan Application 1003. This is this loan application. This 1003 is required with every single lender. The thing is 1003 is an incredibly difficult document to read. It's hard to see where blanks are and what information needs to be in there.

1003 Online

So instead, what a lot of lenders do is they have a web application. So it's 1003, but it's done online. So it's easy to actually go through on your own. So what we're going to do is go through the computer application that we have here at our company quickly.

Please do not fill this out on my website, unless you're applying in Ohio, Florida, or Tennessee, which are the light states I'm licensed in right now, I would hate for you to go through this whole process, and then I have to send you an email and tell you I can't work in your state.

Set up an account and login

So the first thing that you're going to do is your lender is going to send you a link to log in or create an account. So what you probably will do is actually set up an account. You'll have to register with your email and a password online.

What you can do with most web applications is either apply it on your computer or on your phone. So put in your information like your name and your phone number. And your lender might have something that asks, do you want to receive information in a specific way? We're going to say yes and finish this setup. After that, we get a nice little welcome screen.

Different web app for different lenders

Something to know is that different lenders have different web applications for their own mortgage applications. Yours might not look like this. It might look a little bit different and might have a different company branding.

Same information needed for different lenders

But all of these questions are going to be very similar across different lenders because again, it all is pulled from the URLA 1003.

First section is about you

So what I'm going to put in first is just general information like date of birth.

Legal Status

So we're going to say unmarried. You'll notice there's no single option. Lenders legally are not allowed to ask if you're single, they have to use the language married, separated, or unmarried.

So separated is a legal separation or divorce, or if you're divorced, you can also put unmarried in there as well. After that we will put the current address, then you're going to put in your mailing address if you have a separate one.

Dependents

Also, we will be putting dependents, and your dependents are the ones filed on your taxes. So let's say we have one dependent and then we're going to put in the age.

Additional Questions

We also need to answer, do we currently rent? If yes, we also need to include the monthly rent amount.

Co-borrower

There's also a question, are we applying with a co-borrower? So you're either applying by yourself or applying with someone else. Either option is great. Something that you can do, if you're, you want to be on the cautious side is you can apply with a co-borrower someone like as a spouse or a partner. Then talk to your loan officer. The loan officer can always remove a co-borrower and they can always add a co-borrower if they need to. If you have a co-borrower, you are also going to have the exact same information put in as you as the borrower.

Review your information and proceed!

So we're going to review this information. This all looks good to me, right? Yeah. You can tell, you can see right now so far, it's not too bad. It's just some general information here.

Purchase or refinance

Now we're going to fill out our goals. So what do we want to do? Do we want to purchase or refinance? We're going to say we want to purchase. So we're going to choose the state that we're purchasing in.

Then the type of property, we're just going to take our best guess here on what kind of property we're purchasing. So you're going to be a single-family home, which is most people or it's a condo or a townhouse, a co-op, or maybe a multiunit.

How are we going to use the property?

Then we have to say, how are we planning on using that property? Are we going to live in it? If so it's a primary residence. Are we using it as a second home, then it's a secondary residence or are we using it as an investment property?

Purchase price

So in here, we're going to put our purchase price. Sometimes it's a little confusing because you're thinking I need somebody to tell me the purchase price. So what you're going to do is put in an approximate idea of what you're thinking. Just shoot out a number, or are you looking for something that's a hundred thousand or 700,000? Just give us some sort of ballpark range. With our down payment, we can put in how much we're putting in dollars or percentage, a minimum down payment on a conventional loan is 3%. Then, t's going to auto calculate for us, which is nice. So let's go ahead and continue.

Employment information

So now we're going to look at some personal info. So have you had employment in the past two years? If yes, add employment, then we'll put in your employer name, phone number, and address.

Then what we're going to put in here is either the annual salary or hourly. Again, this is where you're giving the best guess of what did you earn in this past year? So let's say in this past year we earned $80,000. Then your need to answer: Do you receive any overtime? Any bonuses? Any commissions?

Always include two-year work history

So something that we need to make sure we do is include a two-year work history. We need to include our past employment here. So now we can go ahead and verify our employment history and make sure that's all correct. So we'll finish with employment.

Your other income

Then what we can do is we can say any other income that we earn outside of employment. So things like dividend or interest, income, pension, retirement, income, alimony, or child support, income net rent, social security or disability, or anything that's other right now.

Your assets

Now, what we have to do is talk about our assets and a lender needs to verify your assets to be able to see that you actually have money to close and they need to verify where that comes from.

Down payment "most of the time" should not be borrowed

So they need to make sure that you're not borrowing money for a down payment. They need to make sure that's actual money that you have that's not being borrowed.

Assets requires documentation

So anytime you're putting in an asset in here, the lender's going to ask for you to verify that with paper documentation. So for instance, if I come in here and say in my checking account I have a specific amount of money. The lender needs to verify that with the bank statements. So something to keep in mind.

So for example, I'm gonna say in my savings accounts with Simple Bank. I have let's say $30,000. You can put an account number or not. Sometimes people get a little uncomfortable putting account numbers, but your lender is going to know the account number when you send the bank statements.

Anyway, the reason why the account number is there is so they can understand which account. Different money as in if they're seeing multiple thanks demons. So if you want, you can put in it's the last four digits. That's all the lender really needs. They just need to be able to see bank statements and the assets that you're talking about and match. So we're going to say, this is all the assets that we have right now and we'll continue.

No need to put your assets if you will not use it for down payment

The assets the lender wants to verify are the things needed for the down payment and closing costs. If you have a pension 401k, that's great. But if you're not using that money for down payment or closing costs, it's not really important to put it in the application.

Social security and credit check

So you will put your Social Security number, but what's going to happen on your application is, this is going to ask if you consent to a credit check and agree to its terms, so you can always click to find the terms of the credit check, but you can choose yes or no. We can choose yes here then you can talk with your lender about, do you want a hard credit pull or a soft credit pull.

Highest level of education completed

Then we're also gonna put in the highest level of education.

Credit pull

Something to note is when you go through an application, it most likely is not going to ask you how much you pay in expenses or how much your debts are. That's because when a credit report is pulled, it actually auto pulls in all of your monthly debts.

Address history

So the lender can see that to qualify you on a loan. So now what we can do is look at a two-year resident history. If you have, if this was less than one, less than two years, then you'd want to add a previous address. We need to show it to your resident's history.

If there are things that you don't know that's okay. Your lender is there to help you verify some of that information.

Declaration

So now what we do is we go onto the declarations section. This is something that's required by the government, along with demographic information. And basically what this is doing is we have to give declarations about our financial picture along with our demographic picture.

So the questions are: Do you intend to occupy the property as your primary residence? Are you going to live in the house? Yes or no? Are there any outstanding judgments? So does anybody have a judgment against you right now?

Have you declared bankruptcy within the past seven years? Either chapter seven or chapter 1. Have you had any foreclosure given title deed in lieu in the past seven? Are you currently in a lawsuit? Have you had any loans with foreclosure?

Your lender will explain it to you

At any point in time, we're going to say no. And sometimes you might be able to, if you click yes, in an explanation here that helps your lender understand and document things and keep in mind too. If you have had these bankruptcies, that's okay. It doesn't disqualify you. Your lender is going to help you understand it. The timelines and what's needed.

Also, we need to answer the following questions: Are you presently delinquent or in default of any federal debt or any other on any other loan, a mortgage financial obligation bond, or loan guarantee. So this is really important to tell your lender, especially if you haven't paid taxes, you have that debt that you need to be able to pay. And the lender is going to have to check that before you can close on the mortgage.

Are you obligated to pay alimony, child support, or separate maintenance? If so, that's something that needs to be included in your debt-to-income. So that's something that we had here.

Borrowed down payment: When?

Then is any part of the down payment borrowed we're going to pick? No. In most cases, this answer will be no, really one of the only times you can borrow it down. Is it when it's something like a 401k that you're borrowing against, or you're using a home equity line of credit, but you can't use unsecured funds to use on the down payment of your home. It can only be secured loans.

Some other probing questions about you

Are you co-maker or endorser on a note? And we can maybe say for example, yes, co-signed for Son's car loan. Have you had any ownership, interest in a property in the last three years? That just means, have you owned a home in the past three years?

Citizenship status

Then finally what's our US citizenship status, either US citizen, permanent resident alien, or non-permanent resident alien. For most people, they're going to be US citizens. If you're a permanent resident alien you can also get a mortgage very similarly to, if you are a citizen, if you're a non-permanent resident alien, you can use a foreign national program. Those have a little bit more restrictions to them, but just know you can get a mortgage with all three types of citizenship status.

Demographic

Demographic information is here because the government requires it.

Why the government requires it

Basically what they're trying to do is they're trying to not really get information about you. They're mainly wanting to see are lenders discriminating against certain types of demographics.

So they're gonna ask about ethnicity or race and sex. So what you can do, if you want, you can just put, I do not wish to provide on all of this. That's not going to change anything with your application. What happens is at the end of a quarter, a call report has to go out. Basically, federal regulators. They're going to try to spot any patterns of any sort of profiling that's going on, that they can investigate. So that's why this is here. They want to make sure no discrimination is going on.

Few more questions

Then it looks like here are some of our last questions, ideal, comfortable monthly payments. So what's a payment that we're shooting for. We can tell this or a loan officer knows a comfortable range that way they can help us meet those numbers with a price range we're looking at.

Also, they will ask, will your employment or hours be affected by COVID. Are you a veteran?

Review and make sure all the information is accurate

So we're going to review all the information. Make sure it's accurate. So we can review each section here, make sure all that information is correct and submit it.

So once you submit, your all done!

That's as difficult as it is. It really shouldn't take you too long. It will only take you roughly 10-15 minutes. It really isn't that difficult to pull in information.

What's next?

So from here, your loan officer got that app. So the next step in the process is for you to submit documents to them.

Make sure to submit all the documents in a neat way

So it'll be things like your pay stubs, your W2's, maybe tax returns, ID, your bank statements. What you want to do is package that together really nicely so that your lender can process your application really quickly. If you don't do this, what ends up happening is it can be just like teeth pulling where your lender takes a while to get back with you. Cause they're trying to search for the documents that you need. You're sending them one by one.

The best way to tackle the next step and make it as quick and painless as possible is to collect documents in the right way.

Talk with a loan officer
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