Now that you’ve found the right home and have a signed purchase agreement it’s time to fill out your mortgage application.
The mortgage application used by loan officers is formally known as the Uniform Residential Loan Application or the 1003. This five page document covers information such as your loan type, property information, employment history, and assets and liabilities. To complete the application your loan officer will need to see documentation verifying your income, work history, and credit history if it wasn’t provided during the pre-approval.
Once you’ve completed and signed your loan application, there’s a lot of “behind the scenes” work that happens to make sure your loan is ready for your anticipated closing date.
Processing occurs when your paperwork is organized, entered into “the system” and prepared for an underwriter’s review. This is typically done by a loan processor. A processor is extremely helpful. They double check all information for accuracy, help you order title and an appraisal, and submit a polished application to the underwriter. They watch over your loan from start to finish, making sure that your information is protected and that deadlines are met.
Your Loan Estimate will be prepared and sent to you within 3 business days of submitting your application to you loan officer. A Loan Estimate is a detailed estimate of the loan for which you are applying. Three distinct sections cover different parts of your mortgage. The first section explains your loan terms, including your interest rate and loan amount. Section two covers your projected payments and estimated taxes/insurance. The final section talks about your closing costs, breaking them down into sections such as origination charges and escrow payments.
Locking your interest rate guarantees you a specific interest rate for your home loan. It protects you from interest rate fluctuations that could, and most likely will, occur before you close on your new home. Your loan officer will look at key indicators to anticipate what will most likely happen to interest rates in the near future and recommend a decision based on what they see. If interest rates look like they will rise, your loan officer will recommend locking your rate. If the key indicators point to lower interest rates, your loan officer might suggest waiting to see if you can obtain an even better rate.
What’s next? Now that you’ve completed your application, locked your rate, and the processor has organized the loan file it will be submitted for underwriting review.