Mortgage Application Page 3

7. Details of Transaction

All of the applicable lines in the Details of Transaction section should be completed. This area of the loan application is used to calculate the total funds needed by the borrower to close the loan transaction.

• Purchase Price: The purchase price is the amount agreed upon by the buyer and seller of the property. This amount is stated in the sales/contract/escrow instructions.

The amount written on line "a" of the Details of Transaction section should not include any discounts, rebates or other allowances paid or allowed to the buyer of the property.

• Alterations, Improvements, Repairs: The amount representing any alterations, improvements and repairs that need to be made/will are made to the subject property should be indicated on this line.
• Land: The purchase price of the land (lot) should be indicated on this line only if it was acquired separately, not included in the price of the improvements.
• Refinance: The amount that is being refinanced should be indicated on line d of the Details of Transaction section. Lines a and c should not be completed to describe a refinance transaction. The figure should include the total amount of all existing liens against the property.
• Estimated Prepaid Costs: The dollar amounts that the lender is estimating the costs that the borrower will have to prepay (real estate taxes, interest, mortgage insurance, and homeowners insurance).
• Estimated Closing Costs: The estimated dollar amount paid by the borrower to effect the closing of a mortgage loan (origination fee, survey, and attorney’s fees).
• PMI, MIP, Funding Fee: The amount paid (whether in cash or financed) by the borrower for private mortgage insurance on a conventional loan, MIP on a FHA loan, or Funding Fee on a VA loan.
• Discount: The amount of money, typically based upon the loan amount, paid to the lender to reduce the interest rate.
• Subordinate Financing: The amount of secondary financing obtained to finance the purchase of the property.
• Borrower’s Closing Costs Paid by Seller: The total costs that the seller is paying on behalf of the borrower that are associated with the purchase of the property.
• Other Credits: Money that the borrower has already put down on the mortgage transaction. Examples of other credits include cash deposit, application fee and underwriting fee.
• Loan Amount: The amount of money that the borrower is borrowing to complete the mortgage transaction.
• PMI, MIP, Funding Fee Financed: If the borrower chooses to finance the mortgage insurance premium or the funding fee, the amount of the premium or fee being financed must be indicated on this line of the form.
• Loan Amount (add m & n): Add the total amount being financed.
• Cash from / to Borrower (subtract j, k, l, & o from I): Amount from or to the borrower's hand.

8. Declarations

This section of the form asks the borrower questions about his / her legal history.

• Legal Questions: A borrower who holds an Alien Registration Card (Green Card) and has established a long-term residency commitment in the United States is not considered a foreign borrower. If the borrower marks A YES to the questions a-i, this should act as a red flag, Your job is to clarify the situation and document if for the loan file.
• First-Time homebuyer: The response to question m will enable lenders to determine whether a borrower qualifies as a first-time homebuyer.
• Question l: If the borrower responded NO to the question, Do you intend to occupy the property as your primary residence? The borrower does not have to respond to question m.

9. Acknowledgment and Agreement

• Borrower Signatures: This section of the form asks the borrower to agree to certain stipulations regarding the use of the property, first mortgage, right of lender, and borrower misrepresentations.

The loan application is not a binding agreement unless it is signed by the borrowers.

10. Information for Government Monitoring Purposes

• Statistical Information: The last section of the loan application involves statistical information for the federal government. In order for the government to monitor the lender’s compliance with equal credit opportunity, fair housing and home mortgage disclosure laws, each lender should complete this section on each loan application.

11. Continuation Sheet/Residential Loan Application

• This sheet is used to list the balance of debts owed.