Mortgage Application Needs
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Lenders Will Require More Thorough Information before they can finalize your mortgage application. Even though you may begin your lender search through our national network, the lender can only formally approve your application after you provide the following information below:
Your Rights Upon Submission
The following information was obtained from the Federal Consumer Information Center
Buying Your Home: Settlement Costs and Helpful Information
- RESPA disclosures help consumers become
better shoppers for settlement services.
RESPA requires that borrowers receive
disclosures at various times.
- These disclosures lists the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers.
Good Faith Estimate of Settlement Costs:
- RESPA requires that within the next
three business days after submission of
your mortgage application, the lender
or mortgage broker must provide you a
Good Faith Estimate of settlement service
charges you will likely have to pay.
- Note that the amounts listed on the Good Faith Estimate are only estimates. Actual costs may vary at time of closing.
Servicing Disclosure Statement:
- RESPA requires the lender or mortgage broker to tell you in writing, when you apply for a loan or within the next three business days, whether it expects that someone else will be servicing your loan (collecting your payments).
Affiliated Business Arrangements:
- When a lender, real estate broker, or
other participant in your settlement refers
you to an affiliate for a settlement service,
RESPA requires the referring party to
give you an Affiliated Business Arrangement
- Affiliates are businesses that are owned or controlled by the parent company, such as the lender, real estate broker, or other involved in your settlement. You are not required to use these affiliates and under certain circumstances, you are free to shop for other providers.
HUD-1 Settlement Statement:
- One business day before the settlement,
you have the right to inspect The HUD-1
Settlement Statement itemizes the services
provided to you and the fees charged to
you. This form is filled out by the settlement
agent or attorney who will conduct the
- You have the right to inspect this statement one business day before settlement. Be sure you have the name, address, and telephone number of the settlement agent if you wish to inspect this form.
Escrow Account Operation & Disclosures:
- Your lender may require an escrow account
for the prompt payment of taxes and insurance
premiums. To start the escrow account,
you will probably an initial amount and
a cushion to ensure that the lender has
enough money to make the payments when
due. RESPA limits the amount of the cushion
to a maximum of two months of escrow payments.
- Your lender or servicer is required to review the escrow account annually and send you a disclosure each year which shows the prior year's activity and any adjustments necessary in the escrow payments that you will make in the forthcoming year.
Mortgage Submission Protection Laws
There are several federal laws which provide you with protection during the processing of your loan. The Equal Credit Opportunity Act ("ECOA"), the Fair Housing Act, and the Fair Credit Reporting Act ("FCRA") prohibit discrimination and provide you with the right to certain credit information.
- No Discrimination..
ECOA prohibits lenders from discriminating
against credit applicants on the basis
of race, color, religion, national origin,
sex, marital status, age, the fact that
all or part of the applicant's income
comes from any public assistance program,
or the fact that the applicant has exercised
any right under any federal consumer credit
protection law. To help government agencies
monitor ECOA compliance, your lender or
mortgage broker must request certain information
regarding your race, sex, marital status
and age when taking your loan application.
The Fair Housing Act also prohibits discrimination in residential real estate transactions on the basis of race, color, religion, sex, handicap, familial status or national origin. This prohibition applies to both the sale of a home to you and the decision by a lender to give you a loan to help pay for that home. Finally, your locality or state may also have a law which prohibits discrimination.
- Prompt Action/Notification
of Action Taken. Your lender or mortgage
broker must act on your application and
inform you of the action taken no later
than 30 days after it receives your completed
application. Your application will not
be considered complete, and the 30 day
period will not begin, until you provide
to your lender or mortgage broker all
of the material and information requested.
- Statement of Reasons
for Denial. If your
application is denied, ECOA requires your
lender or mortgage broker to give you
a statement of the specific reasons why
it denied your application or tell you
how you can obtain such a statement. The
notice will also tell you which federal
agency to contact if you think the lender
or mortgage broker has illegally discriminated
- Obtaining Your
Credit Report. The Fair Credit Reporting Act ("FCRA")
requires a lender or mortgage broker that
denies your loan application to tell you
whether it based its decision on information
contained in your credit report. If that
information was a reason for the denial,
the notice will tell you where you can
get a free copy of the credit report.
You have the right to dispute the accuracy
or completeness of any information in
your credit report. If you dispute any
information, the credit reporting agency
that prepared the report must investigate
free of charge and notify you of the results
of the investigation.
- Obtaining Your Appraisal.
The lender needs to know if the value
of your home is enough to secure the loan.
To get this information, the lender typically
hires an appraiser, who gives a professional
opinion about the value of your home.
ECOA requires your lender or mortgage
broker to tell you that you have a right
to get a copy of the appraisal report.
The notice will also tell you how and
when you can ask for a copy.
- Prohibited Fees. It is illegal under RESPA for anyone to
pay or receive a fee, kickback
or anything of value because they agree
to refer settlement service business to
a particular person or organization. For
example, your mortgage lender may not
pay your real estate broker $250 for referring
you to the lender. It is also illegal
for anyone to accept a fee or part of
a fee for services if that person has
not actually performed settlement services
for the fee. For example, a lender may
not add to a third party's fee, such as
an appraisal fee, and keep the difference.
- Permitted Payments. RESPA does not prevent title companies,
mortgage brokers, appraisers, attorneys,
settlement/closing agents and others,
who actually perform a service in connection
with the mortgage loan or the settlement,
from being paid for the reasonable value
of their work. If a participant in your
settlement appears to be taking a fee
without having done any work, you should
advise that person or company of the RESPA
referral fee prohibitions. You may also
speak with your attorney or complain to
a regulator listed in the Appendix to
- Penalties. It is a crime for someone to pay or receive an illegal referral fee. The penalty can be a fine, imprisonment or both. You may be entitled to recover three times the amount of the charge for any settlement service by bringing a private lawsuit. If you are successful, the court may also award you court costs and your attorney's fees.
Mortgage Tools and Forms
|Calculate Your Debt Ratio
The debt-to-income ratio is calculated by: dividing your fixed monthly debt expenses by your gross monthly income.