Steps in the Process

When you apply for a mortgage, several things happen:

• Your lender will look at your credit report.
  Your lender will look at your credit report to verify your credit history. You'll be charged a fee for this document as well. If you're pre-approved, this step may have already been completed.
• Your lender will verify your personal information.
  Your bank account and employment information will be verified. Your lender may ask you for your 2 most recent monthly bank statements or pay stubs. If you can't provide them, a Verification of Employment (VOE) and/or a Verification of Deposit (VOD) will be requested on your behalf to verify the last 2 years of employment and banking information.
• Your lender will get an appraisal.
  The appraisal will determine the market value of your new home, which will be used as collateral for your loan. You'll be charged a fee for this service; it will likely be included in your closing costs.

Your Documents

Your lender is required by law to provide you with the following documents:

• Loan Estimate.
  This disclosure includes a summary of the total cost of credit, such as the Annual Percentage Rate (APR), settlement charges and other specifics of the loan.
• "A Home Buyer's Guide to Settlement Costs."
  This guide is a government publication that describes the closing or "settlement" process, associated costs, and your rights.
• Annual Percentage Rate (APR) information.
  This is the cost of credit expressed as a yearly rate. The APR includes the interest rate, points, broker fee and any other charge you're required to pay in order to obtain your mortgage loan.
• Adjustable-Rate Mortgage (ARM) disclosure.
  If you're applying for an adjustable rate mortgage (ARM), this disclosure includes information about terms and costs associated with an ARM, past performance of the index to which the interest rate will be tied. You'll also receive the "Consumer Handbook on Adjustable-Rate Mortgages."

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