A mortgage application is a type of loan application. When a person wants to buy real estate, he applies for a mortgage from a bank, mortgage company or other type of lending institution. To do so, he fills out a form, which is referred to as a mortgage application. The mortgage application asks a number of important questions about the applicant's identity, employment history, income, monthly expenses, and debts. It also asks for information about the house the person wants to buy and the amount he wants to borrow.
The physical application form is only one part of the mortgage application process. A big part of this process is the checking of the borrower's credit history. The bank, lending company, or other lending institution checks the borrower's credit history through a credit bureau. The purpose of this check is to find out whether or not the borrower has a history of paying his bills on time. No matter how good an applicant looks on a loan application, he stands to be rejected if his credit history is poor. There are some mortgage lenders that grant loans to people with imperfect credit, but the terms of such loans may be less optimal than those offered to borrowers with good credit.
Before submitting a mortgage application, many home loan experts recommend that borrowers check their credit files for inaccuracies. If the wrong information is listed, a borrower can contact the credit bureau to learn the process for having it changed. To have the best chance of securing a home mortgage loan, a borrower will want to put his best foot forward with accurate information.
Besides the credit check, another important part of a mortgage application is the documentation a borrower provides. A bank or mortgage company is unlikely to take a borrower's word for his income, expenses, and employment. To prove what he stated on his mortgage application, a borrower may need to provide tax returns, bank records, and proof of income. These types of documents may be required not only of the primary borrower, but also of anyone else whose name is included as a co-borrower or co-signer on the mortgage application.
Sometimes a mortgage lender will reject an application. When this occurs, the mortgage lender must provide the borrower with an explanation of the refusal. This explanation must be given in writing and cite specific reasons for the rejection of the loan application. Some of the reasons an application may be rejected include a low down payment, poor credit history, and insufficient income to cover the amount of mortgage the borrower is seeking. Sometimes a mortgage application may be turned down because the home is appraised at an amount that is too low given the amount of loan the borrower is seeking.