In the previous two posts, we've been discussing the first five sections of the universal loan application. Today we'll cover the last five sections.

This section should be fairly self explanatory, let’s talk a moment about the kind of assets that are important. There are two types of assets that you can list:

1. Liquid Assets (cash on hand, checking, savings, money market accounts, stocks/bonds, etc.)
2. Passive Assets (real estate owned, automobiles owned, antiques, etc.)

While passive assets will help make your net worth appear higher, it is liquid assets that really make an impression on an underwriter. Being able to show a fair amount of ready to spend cash to put toward the down payment and closing costs, and more importantly to get toward monthly payment reserves, will go a long way toward convincing an underwriter that you can afford to obtain and keep the mortgage that you are applying for. Even if you are purchasing a home with no down payment and the seller is paying for most of the closing costs, it is still important to show as much cash on hand as possible for the monthly payment reserves. Show the underwriter that you have a little safety cushion under you (for a few months) should something happen and you are unable to work.

It was once said that this section looks a little like an income tax form. However it’s not nearly as complex as that. Most of the boxes should be fairly easy to understand.

1. "Purchase price" is for of course, the price on your sales contract, if you are purchasing a home.
2. "Refinance" would the pay off amount of your current mortgage.
3. "Estimated Prepaid items" and "Estimated Closing Costs" can be found on your Good Faith Estimate.

1. "PMI and MIP Funding Fee" apply to FHA loans and, if applicable, can be found on the Truth in Lending Statement.
2. "Discount" refers to any discount or buy-down points that you may be willing to get a lower interest rate.
3. "Total Costs", Box I, refers to the total cost associated with the loan (the total of box A through H).
4. "Subordinate Financing" will show the amount of your 2nd mortgage, if you are obtaining a combo mortgage.
5. "Closing Costs (CC) paid by seller" – pretty self explanatory.
6. "Other credits" will include things such as any earnest money that you put down on your sales contract or any costs being paid for by your loan officer or mortgage broker.
7. "Loan amount (excluding PMI/MIP fee being financed)", Box M – amount of the mortgage that you are applying for.
8. "PMI/MIP fee being financed", Box N – if any of the PMI/MIP fee from box G is being financed into the loan, then enter that amount here.
9. "Total Loan Amount", Box O – Add the figures from Box M and Box N and enter the total here.
10. "Cash to/from Borrower" – Subtract the figure in Box O from the figure in Box I ("Total Costs") and enter the amount here. This is the amount that the borrower will either need to bring to closing or the amount of cash out that the borrower will receive at the closing table.

Read this carefully before you sign and date it. Some of the high points that you are agreeing to include:

• Everything you have stated in the loan application is the truth

• You will occupy the property in the manner that you stated in the "Declarations".

• If the mortgage payments become delinquent, then the lender has the right to report this to the credit bureaus and/or foreclose on the mortgage.

• That the property that you are buying will not be used for anything illegal.

Good old Uncle Sam. He always to know who is doing what and where and the mortgage industry is no different. The information requested in this section is pretty basic and completely voluntary. You are not required to fill it out if you do not want to. Simply mark the box labeled "I do not wish to furnish this information."

Well that’s it, the entire universal loan application from start to finish. Hopefully you now have a better understanding of this, sometimes rather frightening, document. Just always remember, if you do not understand a particular section, always go back and ask your loan officer or mortgage broker. After all, making sure that you understand and are comfortable with the mortgage process is one of the things that they are getting paid for. 

                                                                                                                                                                 John Worley
                                                                                                                                                    www.rtlgeorgia.com