Californians with student loan debt often wonder if they can qualify for a mortgage loan,…
Overview of the Mortgage Application Process in California, With FAQs
Over the years, we have learned that home buyers in California typically have a lot of questions about the mortgage application process. We developed this guide to address some of those common questions.
Summary: This article explains how the mortgage loan application process works in California, including required documents and key steps in the process.
How to Apply for a Mortgage Loan in California
For the most part, this process is fairly straightforward. To apply for a home loan in California, you would fill out a standardized application form and provide some other documents relating to your finances, employment, etc.
This allows you to get pre-approved for a specific loan amount based on your ability to repay.
After that, you can begin the house-hunting process to find a suitable property that falls within your price range. You’ll make an offer to buy the home, negotiate with the seller, and eventually move into the final closing stage.
The Application Process: Step-by-Step Breakdown
The process “officially” begins when you submit a loan application. This can be done online, through the mortgage broker or lender’s website, or in person.
These days, a lot of the mortgage process can be handled digitally, thanks to electronic document submission and e-signature tools.
While the loan process can vary, it usually works like this:
- Get pre-approved by a lender and submit an application.
- Begin the house hunting process to find a suitable property.
- Make an offer on the house and sign a purchase agreement.
- Give your lender a copy of the purchase agreement.
- Arrange to have the home inspected (optional).
- Wait for your lender to complete the underwriting process.
- Attend the closing, sign all documents, and pay your closing costs.
As you can see, the mortgage application is only one part of a broader process that includes multiple parties and procedures.
The Uniform Residential Loan Application
When you apply for a mortgage loan in California, you will most likely have to complete a document known as the Uniform Residential Loan Application (URLA). Most banks and mortgage companies use the same form for this process. It’s standardized across the lending industry.
This document is also referred to as “Freddie Mac Form 65” or “Fannie Mae Form 1003.” Regardless of the name being used, it’s the same 5-page document.
Tip: You can find a sample form online, by Googling the common name: “Uniform Residential Loan Application.” This will show you what kind of information you need to provide.
This document initiates the application process, and it asks for a lot of information. So it might take you some time to get through it all. Just be sure to fill in all requested fields honestly and accurately.
Information You’ll Need to Provide
The standard mortgage application form used in California includes five pages of fill-in-the-blank information, along with several pages of instructions. Again, you can find an example of this document online by searching for “Fannie Mae Form 1003.”
The mortgage application typically asks for the following information:
- Borrower Information: This section includes the borrower’s name, social security number, date of birth, and other personal identification details.
- Property Information: Details about the property being financed, including its address, type (e.g., single-family, condominium), and the estimated value.
- Loan Details: Information about the loan being applied for, such as the loan amount, interest rate, and term (e.g., 30-year fixed).
- Employment and Income: This section collects details about the borrower’s employment history, current employer, income, and any additional sources of income.
- Assets and Liabilities: Borrowers need to provide a comprehensive list of their assets (e.g., bank accounts, investments) and liabilities (e.g., outstanding loans, credit card debt).
- Monthly Housing Expense: Information about the borrower’s current housing expenses, including rent or mortgage payments, property taxes, and homeowner’s insurance.
If you’re getting pre-approved for a mortgage loan and haven’t yet located a home, you can leave the “property information” section blank and fill it in later.
Other Documents Required by Lenders
The mortgage application mentioned above is one of the key documents you’ll be submitting when you apply for a home loan in California. But there is some other documentation as well.
At some point, you’ll need to provide documents relating to your financial situation and employment. Lenders use these to determine your creditworthiness and the amount you’re qualified to borrow.
Commonly requested documents include:
- Proof of income such as W-2 forms, pay stubs, or tax returns.
- Proof of assets such as bank statements, investment statements, or retirement accounts.
- Proof of debts including credit card, student loan, and car loan statements.
- Employment verification, such as a letter from your current employer.
Elsewhere on our site, we’ve created an A-to-Z list of loan documents commonly used by mortgage lenders in California. It goes into more detail on the paperwork side of the application process.
What Happens After the Application?
So, you’ve completed your application form and submitted it to the lender. You’ve provided additional documents as requested. And you’ve gotten an initial “green light” from the lender that you’re a good candidate for a loan.
Now what? What’s the next step in the process, once you’ve applied for a mortgage loan?
In a typical California home-buying scenario, house hunting is usually the next step.
Tip: Applying for a mortgage loan allows you to determine how much you’re able to borrow. And once you know that, you’re ready to go out and look at homes.
In a typical lending scenario, the borrower will receive a mortgage pre-approval letter from their lender. This document indicates the loan amount, terms, and other details relating to your mortgage.
In California, pre-approval letters are usually valid anywhere from 30 to 90 days. The letter itself should state how long it’s valid for.
There’s a logic to this sequence. The application and pre-approval process helps determine how much of a house you can afford to buy. This in turn allows you to limit your house-hunting efforts to a specific price range, for a more efficient search.
How Long Does the Process Take?
In California, a mortgage application can be reviewed within a matter of days. However, as mentioned above, it’s only the first in a series of steps that lead to the final closing and funding of the loan.
In California, the entire loan process (from the initial application to the final closing) can take anywhere from 30 – 45 days, on average. But it can also go faster, especially if you work with an experienced broker like Bridgepoint Funding.
Related: How long does loan approval take?
What Happens if My Application Is Denied?
If a mortgage lender in California denies your application, they will most likely tell you the reason for the denial. That way, you’ll at least know what you need to work on going forward.
Also keep in mind that different lenders have different methods when it comes to approving applicants. So a borrower who gets turned down by one lender might get approved by another, without changing anything at all.
Here are some common reasons why mortgage applications get denied:
- Low credit score / negative credit profile
- Insufficient income for the desired loan amount
- High debt-to-income ratio (too much debt)
- Inadequate employment history
- A lack of down payment funds
- Recent bankruptcy or foreclosure
- Unverifiable or unstable income
Note: If you’ve been denied for a home loan in the past, we might be able to help. In some cases, a loan application can be restructured in a way that improves the chance for underwriting approval. Learn more here.
What Can I Do to Speed Up the Process?
The mortgage application and processing timeline in California can vary due to a number of factors.
For instance, if a mortgage lender or underwriter has a major backlog, it might take them longer to review applications and approve loans. The overall complexity of the real estate transaction can also influence the timeline.
But there are certain steps you can take to help keep the process on track:
- Start rounding up your documents early, or at least determine how and where to obtain them.
- Ask plenty of questions to make sure you understand how the process will unfold and what the lender needs from you.
- Complete the application form fully and accurately.
- Keep in touch with your mortgage broker or loan officer throughout the process.
- Handle any additional paperwork requests in a timely fashion.
- Choose an experienced mortgage company with a track record for efficiency, like us!
Disclaimer: This article is intended for a general audience. Your situation might differ from the process outlined above. Home loan application steps and procedures can vary slightly from one borrower to the next, for a variety of reasons.
