Buying a home involves several steps. You should start by becoming familiar with real estate terminology and determine how much you can afford. Then you can start with the first step in the process: completing your loan application.

Regardless where you want to obtain a loan, you must complete the Uniform Residential Loan Application (better known as Fannie Mae form number 1003). This is a five-page industry-standard form that lenders use to get the necessary information to approve you for a loan. It contains ten sections that basically describe details about you, your finances, liabilities, and other information.

Completing form 1003 could be initially confusing. However, your loan officer can help you with the application, in person or over the phone. In either case, it is better if you understand this form before contacting your loan officer to be ready to answer questions your loan officer may have.

Form 1003 is described in detail in Uniform Residential Loan Application to assist you understand the mortgage loan application. Follow the instructions and take your time in reading and completing this form.

Section I: Type of Mortgage and Terms of Loan

This first section contains the type of mortgage (VA, FHA, Conventional, etc.) and the terms of the loan (amount, interest, amortization type). Make sure this information matches what you discussed with your loan officer. If you have not selected a property yet, you can enter the maximum amount you wish to borrow.

Section II: Property Information and Purpose of Loan

In this section you need to provide information about the property, such as address legal description, year built, purpose of loan, the source of your down payment, and other details.

If you have not selected a home yet and do not have the information to complete this section, you must indicate “To be Determined.”

Section III: Borrower Information

The third section requires your personal information, including name, social security number, telephone number, date of birth, marital status, number of dependents, and current address. If you have stayed at your current address less than two years, you must provide your former addresses for up to seven years. If you wish to list an additional borrower in your application, you must complete the Co-Borrower section.

Section IV: Employment Information

In this section you specify employment history, including employer information, years on the job, position, title, and other information. You must be able to provide recent paycheck stubs and federal W-2 income tax forms for the last two years. This information will confirm your source of income and that you can afford all costs associated with owning a new home.

If you have been employed at your current position for less than two years or you have multiple jobs, you will be required to provide information on all jobs for the past two years. You will need to sign a Verification of Employment (VOE) form, which your loan officer will send to your previous employers to confirm employment and earnings.

Section V: Monthly Income and Combined Housing Expense Information

In this section you must list all monthly income sources and housing expenses. You must list your gross income (money before taxes or deductions), including base pay, overtime, dividends, commissions, bonuses, rental income, and all 1099 work. You should also list your combined housing expenses, including your current rent or mortgage payments, taxes, insurance, and other monthly expenses. You are not required to provide alimony, child support, or separate maintenance income if you do not wish to consider them when paying your loan.

In addition, some lenders require you to fill out IRS Form 4506-T, to allow lenders to access your tax returns.

Section VI: Assets and Liabilities

This section indicates how much you own (assets) and how much you owe (liabilities). The information in this section will be verified in your credit report – it is important that you are accurate when you complete this section.

To be able to show your financial health, you must provide information about your assets, including:

• Checking and savings accounts
• Stocks and bonds accounts
• Life insurance
• Real estate you own
• Retirement accounts
• Investments
• Automobiles
• Other property you may own

Also, you must provide information about your liabilities to list all outstanding debt, such as:

• Revolving charge accounts
• Real estate loans
• Automobile loans
• Student loans
• Child support or alimony

In the Liabilities section, you must provide current information, including account numbers, creditors’ addresses, balances, and monthly payments.

Section VII: Details of Transaction

This section shows the details of your new mortgage loan. It includes the purchase price, estimated prepaid items and closing costs, any discounts, refinance debts to be paid off, mortgage insurance, the total amount of the loan (including principal, interest, and fees), and other information. Keep in mind that many of these numbers are estimates and will not be confirmed until the loan closes.

Make sure you double-check all numbers and agree with the details of the transaction

Section VIII: Declarations

The Declarations section asks several questions related to present or past legal problems and other situations. You will be asked questions related to outstanding judgments, bankruptcies, foreclosures, lawsuits. Your answers, and the information on your credit report, may affect whether or not you can be approved for a loan, and may also influence on the rate and terms you can get. This section also asks whether you are a U.S. citizen or permanent resident alien, whether you are obligated to pay alimony or child support, and other clarifications that could affect your loan application. You can be approved for a mortgage loan, even if you are not a U.S. citizen, as long as you can show proof of legal residence in the United States.

Section IX: Acknowledgment and Agreement

Make sure you read and understand the entire application. By signing the form, you agree and acknowledge that the information provided in the application is true and correct.

Section X: Information for Government Monitoring Purposes

This is the last section in the application, and contains voluntary information related to your Ethnicity and Race. The government uses this information for statistical purposes to ensure that the housing system in the United States is fair to everyone.

Review Your Mortgage Application

Work with your loan officer to ensure your application is complete and contains accurate information. Incorrect or false information is illegal and may hurt your chances in obtaining a mortgage loan. Always stay away from people trying to falsify information to make you quality for a loan. Be aware that the FBI investigates mortgage fraud, and the majority of cases involve fraud on the loan application. Make sure you provide accurate information on:

• Income
• Employment
• Debts
• If you will occupy the house or rent out the property (loan terms will depend on this factor)

Make sure you do not sign documents that have incorrect information, dates, or blank fields. Even if they offer to fill or fix the information later, be firm and do not sign until everything has been corrected.

A New Beginning of A New Chapter in Your Life

Completing your loan application may be overwhelming, but it is a significant step in owning a home, and also one of the most important investments you can make. Make sure to provide your lender with a complete and accurate application to ensure you can successfully close on your dream home and with the payments you can afford. If you are ready to start this journey, contact a Loan Officer today.