When you apply for a mortgage loan, we are required to provide you with initial loan disclosures within three days of application. There is a bit of paperwork on the front end due to mandatory government regulations. These processes are put in place to both inform you and protect you. These initial disclosures are not meant to convey the final terms of the transaction, but to protect your rights as a borrower and provide you with information to better understand the mortgage process. By signing the initial disclosures, you are not agreeing to any terms, unless you are locking in your rate at the time of initial disclosures. Your signature simply authorizes us to begin your loan process.
The most important items to keep in mind are the mortgage loan application, loan estimate, and program-specific disclosures.
Uniform Residential Loan Application (1003)
Form 1003 is completed twice times during the loan process. Form 1003 is first completed at the time of making a loan application and this form is generally referred to as "Initial 1003", or sometimes the “scratch application”. The Initial 1003 helps establish the date of application, permissible purpose for obtaining credit report, and intent of borrowers to make an application. The initial 1003 may be completed by the borrower or by the loan originator on behalf of the borrower. However, the initial Form 1003 should be signed by each borrower. The information on the Initial 1003 is based off the information in our hands at the time of the initial application. Any subsequent data or corrections made that occur throughout the process and are shown on the Final 1003 prepared at the time of loan closing. The Final 1003 should be reviewed in depth at closing to confirm the loan application information after all the details are accurate.
Initial Loan Estimate
The LE lets you know what you can expect in terms of cost, monthly payments, and loan structure. While these terms are not final, they generally will not increase unless there is a legitimate change in circumstance.
Disclosures give you information about your mortgage, such as a list of the costs you will incur from us or third parties during the transaction. We are estimating those 3rd party costs, plus information about the escrow account. The loan process takes time and information is received over the course of the mortgage transaction. You may receive disclosures in stages accordingly as we receive information on final costs. It’s likely that there will be changes along the way, and some changes may require us to re-disclose. These changes could be things such as the appraised value of your home coming in higher or lower than expected, a change in your income or credit, or any other item that would be related to finances. If any changes during your loan process result in a different loan cost, you will receive a revised Loan Estimate.
You will probably be asked to provide a credit card number to pay for the credit report and appraisal up front however this does not obligate yourself to any other loan fees.
Three days before closing, you will receive the Closing disclosure which will represent the costs you can expect at closing most accurately based off the time the Closing disclosure is sent.