How Does the Mortgage Application Process Work in California?

Home buyers tend to have a lot of questions about the mortgage application process in California. We’ve addressed some of those questions in previous articles. Here, we have compiled some of the most frequently questions relating to the home loan application process.

How does the mortgage application process work?

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.

Mortgage applicants in California use a standardized document known as the Uniform Residential Loan Application, or URLA. You will need to provide some additional documents as well, and we’ll talk about those in a moment.

What kind of information does the application ask for?

The standard mortgage application form used in California includes five pages of fill-in-the-blank information, along with several pages of instructions. You can find an example of this document online by searching for “Fannie Mae Form 1003.”

The mortgage application 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 Information: Information about the loan being applied for, such as the loan amount, interest rate, and term (e.g., 30-year fixed).
• Employment and Income Information: 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.

How can I prepare for the process?

One of the first things you should do is start saving money. You will need to have enough money in the bank to cover your closing costs and down payment. Closing costs typically range from 2% to 5% of the purchase price. The down payment might range from 3% to 20%, depending on the type of loan being used and other factors.

Saving money is one of the best things you can do to prepare for the home buying process. That’s because it takes time. So the sooner you start saving, the better prepared you will be for the mortgage application process.

Related: 15 ways to save for a down payment

You could also start rounding up some of your financial documents. Your mortgage lender will request a variety of documents pertaining to your financial and employment situation. So let’s address that subject next.

What other documents do I need to provide?

When you apply for a home loan in California, you will probably have to provide a series of documents relating to your income, assets and debts. Mortgage lenders and underwriters use these documents to determine your creditworthiness and the amount you are 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.

Related: An A-to-Z list of mortgage documents

How long does the mortgage application process take?

In California, a mortgage application can be reviewed within a matter of days. But it’s only the first in a series of steps that lead to the final closing and funding of the loan.

While the mortgage loan process can vary, it usually works like this:

1. Get pre-approved by a lender and submit an application.
2. Begin the house hunting process to find a suitable property.
3. Make an offer on the house and sign the purchase agreement.
4. Give your lender a copy of the purchase agreement.
5. Wait for the lender to schedule a home appraisal.
6. Arrange to have the home inspected (optional).
7. Attend the closing to sign all documents and pay your closing costs.

As you can see, the mortgage application is only one part of a broader process. In California, the entire loan process from initial application to the final closing can take anywhere from 30 – 45 days, on average. But it can also happen faster in some cases.

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

Can I apply for a home loan online?

In the state of California, you can apply for a mortgage loan online or in person at the broker’s or lender’s office. These days, most mortgage companies offer an online application tool.

With each passing year, the mortgage industry becomes more “digitized” and less paper intensive. In fact, the entire loan process can be handled electronically, from the initial application to the final closing procedure.

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. Additionally, the complexity of the real estate transaction can influence the timeline.

But there are certain steps you can take to expedite the process and keep it 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.
• 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!

Questions? Do you have additional questions about the mortgage application process in California? We can help. Bridgepoint Funding serves borrowers all across the Golden State. Please contact our staff with your questions or to apply for a loan.