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Loan Application & Good Faith Estimate
Printing Instructions
The Uniform Residential Loan Application (Form 1003) must be printed on legal size paper, using portrait format. When printing this form, you must use the "shrink to fit" option in the Adobe Acrobat print dialogue box. |
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Uniform Residential Loan Application (Form 1003)
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Lenders require a completed mortgage application from borrowers (and co-borrowers) as part of the process of obtaining a mortgage. The lender needs a lot of information from the borrowers about income and expesnes so that they can get an indication of the ability and willingness to repay the loan. Lenders generally charge a non-refundable application fee of $200-300. The fee covers the administrative costs incurred required to verify the borrowers' ability to pay back the mortgage loan.
Uniform Application Most lenders use the standard Federal National Mortgage Association ("Fannie Mae") Uniform Residential Loan Application (Form 1003). The form requires information about employment, monthly income, housing expenses, assets/liability, other real estate owned and credit references.It is important to complete the application in full and provide the additional documentation as required to prevent processing delays. Some of these documents include the Purchase and Sale Agreement, two recent pay stubs and your W-2 forms for the previous two years, two years tax returns (if self-employed), or copy of divorce decree or court documents showing alimoney and/or child support. Most lenders will provide assistance with any problems or questions. Good Faith Estimate In response to numerous consumer complaints, Congress passed the Real Estate Settlement Procedures Act (RESPA) in 1974. This regulation required lenders to supply home buyers with a "Good Faith Estimate" of the estimated closing costs and a list of the documents which must be presented and services completed before the closing. The dollar amount is a ballpark estimate because the actual closing costs generally aren't known until a few days before the closing. The information, which must be provided within 3 days of the mortgage application submission, is helpful for new home buyers who can then plan their financial affairs accordingly. Mortgage Application Guidelines Some of the mortgage application guidelines from Fannie Mae are as follows:Gross Monthly Income - Section V
If the net cash flow for an investment property (or the monthly operating income for a two- to four-family property for which the applicant occupies one of the units as a principal residence) is a positive number on the Operating Income Statement (Form 216), it should be listed as "net rental income." If it is a negative number, it must be included in the applicant's monthly obligations. Combined Monthly Housing Expense - Section V
The present monthly housing expenses for both the borrower and the co-borrower should be listed on a combined basis. The proposed monthly housing expense for a two- to four-family property in which the applicant will occupy a unit as a principal residence should reflect the monthly payment (PITI) for the subject property. For all single-family investment properties and all other two- to four-family properties, the proposed monthly housing expense should reflect the applicant's principal residence. Assets and Liabilities - Section VI
When the borrower's and co-borrower's assets and liabilities are not sufficiently joined to make a combined statement meaningful, a separate Statement of Assets and Liabilities (Form 1003A) should be completed for the co-borrower. Details of Transaction - Section VII
The purchase price shown on Line "a" under the "Details of Transaction" should not include any discounts or rebates or other allowances paid or allowed to the purchaser. For refinancing, the amount being refinanced should be shown on Line "d"--Refinance. Lines "a", "b", and "c" should not be used to describe a refinance transaction. The figure should include the total amount of all existing liens plus the costs of improvements that have been--or will be--made. Determining First-Time Homebuyers - (Section VII Declarations)
A first-time homebuyer is an individual who (1) is purchasing the security property, (2) will reside in the security property, and (3) had no ownership interest (sole or joint) in a residential property during the three-year period preceding the date of the purchase of the security property. In addition, an individual who is a displaced homemaker or single parent will also be considered a first-time homebuyer if he or she had no ownership interest in a principal residence (other than a joint ownership interest with a spouse) during the preceding three-year time period. (If a displaced homemaker or single parent solely owned a principal residence, owned a principal residence with anyone other than a spouse, or owned a second home or investment property during the three-year time period, he or she cannot be considered a first-time homebuyer.) The responses to Question M under "Section VIII. Declarations" will enable lenders to determine whether an applicant qualifies as a "first-time homebuyer." (The borrower in a refinance or second mortgage transaction can never be a first-time homebuyer.) However, the question does not need to be answered if the answer to Question L (Do you intend to occupy the property as your primary residence?) is "No." First Time Home Buyer Criteria Instructions for translating these responses into a single "first-time homebuyer indicator" that can be reported to us when the mortgage is submitted for purchase or securitization follow.
- Responses to Question L: Do you intend to occupy the property as your primary residence?
-- If all of the applicants respond "No" to Question L, the applicants will be using the property as a second home or as an investment property, and thus cannot be considered as "first-time homebuyers." -- If any of the applicants respond "Yes" to Question L, review each response to the first part of Question M.
- Responses to Question M--Part 1: Have you had an ownership interest in a property in the last three years? (Note: Only one of the applicants has to qualify for "first-time homebuyer" status in order for the mortgage to be considered as a mortgage to a first-time homebuyer.)
-- If any of the applicants responds "No" to the first part of Question M, the mortgage can be considered as a mortgage to a "first-time homebuyer," no matter how the other applicants respond. -- If all of the applicants respond "Yes" to the first part of Question M, review each response to the second part Question M.
- Responses to Question M--Part 2: What type of property did you own--principal residence (PR), second home (SH), or investment property (IP)?
-- If all of the applicants respond "SH" or "IP" to this part of Question M, the mortgage cannot be considered as a mortgage to a "first-time homebuyer." -- If any of the applicants responds "PR" to this part of Question M, review each response to the third part of Question M.
- Responses to Question M--Part 3: How did you hold title to the home--solely by yourself (S), jointly with your spouse (SP), or jointly with another person (O)
-- If all of the applicants who responded "PR" to the second part of Question M respond "S" or "O" to this question, the mortgage cannot be considered as a mortgage to a "first-time homebuyer". -- If any of the applicants who responded "PR" to the second part of Question M respond "SP" to this question, review "Section III. Borrower Information" on Page 1 of Form 1003 to determine the marital status and number of dependents for each applicant who so responded.
- Responses to "Marital Status" and "Number of Dependents" in Section III. Borrower Information:
-- If any one of the applicants who responded "SP" to the third part of Question M has a marital status of "unmarried" and has dependents or has a marital status of "separated" (regardless of whether he or she has any dependents), the mortgage can be considered as a mortgage to a "first-time homebuyer." -- If all of the applicants who responded "SP" to the third part of Question M have a marital status of "unmarried," but do not have any dependents or have a marital status of "married," the mortgage cannot be considered as a mortgage to a "first-time homebuyer."
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