Steps to Apply for a Mortgage:

A home mortgage is a substantial obligation, and it requires some considerable work and thought. These are the basic steps you can expact:

1. Visit your selected lender and complete a Uniform Residential Loan Application. It requests information about your income, assets, liabilities and a description of the property you want to purchase.

2. The lender will need documentation about your personal finances. You may be requested to provide any or all of the following information; Social Security Number, birth date, recent pay stub showing year-to date earnings, W-2 tax forms and tax returns for the last two years, name, and address, and phone numbers of your employers for the last two years, information about your current loans and charge accounts, information about all savings accounts, stock ownership, and other assets. These assets and liabilities will have to be enumerated with institutions, account numbers, balances, etc.

3. You will have to pay an application fee to cover loan processing costs (if charged by the lender).

4. Your lender is required by law to provide you with the following documentation once you submit your loan application:

a. Truth-in-Lending Disclosure: This statement includes a summary of all costs associated with the loan.
b. "A Home Buyer's Guide to Settlement Costs": A government publication describing the closing or settlement process and its costs as well as information on your legal rights.
c. An ARM Disclosure (if applicable): Information on the terms and costs for an adjustable-rate mortgage, the past performance of the index to which the interest rate will be tied and a copy of the booklet, "Consumer Handbook on Adjustable-Rate Mortgages."
d. Your Annual Percentage Rate or APR: This is the credit cost expressed as a yearly or annual rate. The APR includes the interest rate, points, broker fee and certain other charges that you must pay.
e. A good faith estimate of the costs associated with the loan.
f. A notice concerning your right to a copy of the property appraisal, if you are being charged for an appraisal.

5. Once you submit your application, a number of things will take place:

a. Appraisal: The lender will order an appraisal on the property.
b. Credit Report: Lenders will also examine your files at the credit bureaus. You have a right to know what information is in your credit report and you can have someone at the credit bureaus explain what the report says.

The three major credit bureaus are:

Equifax (800) 685-1111
www.equifax.com

Trans Union (800) 888-4213
www.transunion.com

Experian (888) 397-3742
www.experian.com

You can order a free annual credit report online, by calling 877-322-8228, or by completing the Annual Credit Report Request Form and mailing it to:

Annual Credit Report Request Service
P.O. Box 105281
Atlanta, GA 30348-5281.

Flood Hazard Determination: The lender will determine if the property is in a flood hazard zone. If it is, you will be required by federal law to purchase flood hazard insurance. If you do not purchase the required insurance, the lender is required by law to order the insurance on your property and you must pay for it.

Pest Inspection: You will probably want to pay for a pest inspection to be aware of the condition of the home you want to purchase.
Credit Decision: Your lender will review all the information in your loan application. This information will include the application, credit history, tax returns, appraisal of the property, a title search on the property, your finances (assets, liabilities, income, expenses), the amount of the down payment, the type and term of the loan you are requesting.

When all of the information is considered, the lender will take one of the following actions:
1. The lender may approve your loan application.
2. The lender may ask for more information to help them evaluate the application.
3. The lender may decide not to lend you the money.
4. The lender may make you a loan counter-offer. As an example, you may request a loan with 10% down and the lender may counter-offer with a loan offer if you pay 15% down.

If you are turned down: If your application is declined, federal law requires the lender to tell you in writing, and also to tell you that you have the right to know the specific reasons for the denial. Some lenders will automatically tell you, but with other lenders you may need to ask them to give you the reasons in writing. Make sure you understand the reasons given for the turn-down. You may be able to provide an explanation that would allow the institutionto approve you. For example, your credit report may contain incorrect information.