Applying for a Mortgage

When you apply for a mortgage, what are some of the items that are needed? (These may vary depending on the lender.)

• Social Security cards and driver licenses
• Residence addresses for the past two to five years
• Your landlord's name and address
• Names and addresses of each employer (past two to five years)
• Your most recent pay stubs
• Two years signed tax returns and W2s
• Names, addresses, account numbers and balances of all checking, savings, credit cards and installment loans
• Two most recent bank statements on all accounts
• Information on any stocks or bonds you own
• Details of all real estate owned
• Copy of fully executed sales contract, riders and listing sheet for your current home (if applicable)
• Divorce decree & child support agreements
• Application fee

You will receive a "good faith" estimate of the closing costs from the lender. This is called a "RESPA Statement." It includes the costs for: points, appraisal, title search, title insurance, survey, recording of deeds, and the bank's attorney fees. Some of these items may be included in the points that they charge.

• At this time, there are several other items that may need to be done before the lender gives final approval to the mortgage title, even though the title company stated it was clear.
  
  
• Buyer's Title Insurance - This covers you, the buyer, in the event that the title is not clear. This is usually optional, but recommended.
  
  
• Private Mortgage Insurance - Again, this is something that most lenders require if your down payment is less than 20 percent of the purchase price. It is a protection for the lender in case you default on the loan.
  
  
• Homeowner's Insurance - This is an insurance policy that covers the cost of repairing or rebuilding your home in the event of a natural disaster. Obviously, this is beneficial to both you and the lender. This is something that you will shop around for on your own. You can start with your auto insurance company. Your Realtor may also have some suggestions.

With the exception of the homeowner's insurance, all of the above costs, plus any additional ones such as the appraisal, survey, recording of deeds and the bank's attorney fees will be included in the RESPA provided by the lender. The entire cost to you, the buyer, will usually be in the range of $1,000 to $1,500 excluding points. (The actual amount may be higher or lower than these limits.) The amount of points that you will have to pay depends on the lender's policies, the amount of your down payment, the term and the amount of the mortgage.

This means that you should count on having this much cash available besides the amount of your down payment and the amount of points paid to the lender. The down payment is usually a minimum of 5 percent to 10 percent of the selling price.

So, how much will this cost? Let's take an example of a $150,000 home. Suppose your lender allows you to put a 5 percent down payment on the house, and your closing costs will be between $1,000 and $1,500, and the amount of points paid is 1.5 percent (of the loan). This would come to:

Down payment: $7,500
Closing costs: $1,000 to $ 1,500
Points: (1.5 percent) $2,138

Total: $10,638 to $11,138

If your mortgage is approved, the lender will send you a letter of commitment. If the following information is not provided, you will request an exact accounting of the closing or settlement costs and the required documents that you will need to bring to the closing.