Steps in the Process

When you apply for a mortgage, several things happen:

• Your lender will get an appraisal.
  The appraisal will determine the market value of the property since it will be used as collateral for your loan. You'll be charged a fee for this service; it may be included in your closing costs. By law, you have a right to obtain a copy of the appraisal report.

• 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 already be completed.

• Your lender will verify your personal information.
  Your bank account and employment information will be verified. Your lender will usually ask you for your two most recent monthly bank statements, most recent paychecks or W-2s. If you can't provide the W-2s or bank statements, a Verification of Employment (VOE) and Verification of Deposit (VOD) will be mailed on your behalf to verify the last two years of employment and banking information.

Your Documents

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

• Truth-in-lending disclosure.
  This disclosure includes a summary of the total cost of credit, such as the Annual Percentage Rate (APR) and other specifics of the loan. The APR includes the interest rate, points, broker fee, and any other charge you're required to pay.

• "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.

• Adjustable-Rate Mortgage (ARM) disclosure.
  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, and the "Consumer Handbook on Adjustable-Rate Mortgages."

• 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.

• Good Faith Estimate.
  This disclosure lists estimated costs you will likely incur in connection with the closing of your mortgage.