Valid question. It’s a lot. Like ~85 to ~135 pages. (27 pages are just a booklet.) (But still!)

The short answer: Lending is a highly regulated industry. 

The longer answer: If lending was still unregulated free-for-all and loan applicants knew exactly how lenders need information formatted, we’d only need two documents – the Uniform Residential Loan Application (URLA) and a Loan Estimate (LE). 

You tell us about yourself on the URLA. We tell you about the loan on the Loan Estimate. Let’s call it a day! Alas, it’s not that simple. We’re obligated to provide additional disclosures notifying you of your rights as a borrower and your obligation to provide complete and accurate information. Additionally, we need permission to verify everything you’ve shared with us. 

For a primer on the purpose of each document, check out the Reasonably Comprehensive Index of Initial Mortgage Application Disclosures on this page.

We need your permission to verify the details of your income, employment, and assets and cross-check your tax returns and Social Security number. Feels a bit invasive (we know) (sorry), but third-party verification is a required part of the process. (And um, know know,  you are asking to borrow a healthy chunk of money.)

You say stuff to us on the application. We say stuff to you on the disclosures. 

You need to request a loan before we can work on it. The application checks this box and also triggers requirements for us to provide you with certain information. We provide this information on disclosures. You sign disclosures to acknowledge receipt and give us a paper trail to show we followed the law.

We surveyed 100 clients. Top 1 answer on the board. What’s the most needlessly confusing mortgage document? Survey says… The ECOA Valuations Waiver.

We prefer that you check the middle option in the “Election” section of the ECOA waiver. It says (paraphrasing): “I’m okay receiving a copy of my appraisal within 3 days of my closing date if that means I can close on time.” 

We’ll send you the appraisal no matter what. And if we don’t have the appraisal back about a week before closing, we’ll struggle to close on time. So why do we suggest waiving your right to a seemingly automatic waiting period? 

Because the 3-day wait applies to any aspect of an appraisal, and there are two potential latecomers:    
Corrections – Underwriters often ask for clerical corrections. If the appraiser is busy or on vacation (or just tryna get on our last nerve), these may roll in at the 11th hour. 
Repairs – If the seller is wrapping up a negotiated or required repair, timing may be tight for the appraiser’s reinspection to verify completion.
Checking the middle box authorizes signing within 3 days of receipt of any part of your appraisal – just in case.

Nope! It gets the ball rolling on a potential loan but doesn’t lock you into anything. 

You’re only on the hook for a loan after signing the final closing documents. That’s quite a few steps away. 

/*Cue Karen Carpenter… 🎶We’ve only just begun…*/

It depends. Start by checking your purchase agreement. Your contract may require loan application within a specific timeframe – signing these documents fulfills that requirement.

Next, we have to think about timing. These papers kick off the loan process. Technically, until you sign them, there’s no loan for us to work on. 

The time we need to process a loan varies, but here are general guidelines: 

If closing is 3 weeks away or less: Sign the initial paperwork right away. Any delay could create a domino effect that pushes back your closing date. If the seller doesn’t agree to an extension, your purchase and your earnest money could be at risk.

If closing is 4 weeks away or more: Youlikely have time to focus on inspections first, but we still prefer you sign the initial papers and let us get started right away.

Delaying artificially compresses the time we have to process your loan, which means more stress for you. We’ll be asking you to move faster and everything will feel unnecessarily “last minute”.

Signing your documents doesn’t lock you into the loan—it simply lets get to work behind the scenes, keeping the process on track, even if you’re focused on other tasks. And, we can hold off on ordering the appraisal until you’re over the hump on inspections.

Yes, please, and thank you!
 
We’d like you to review and sign this initial paperwork within 1 or 2 days of receipt.
 
These papers are the kick-off of your loan. Technically speaking, we can’t work on your loan until you sign them. 

If this step feels premature because you’re not positive you’ll purchase the home, don’t worry – you’re not committing to anything. 

The lending process is like a train rolling from station to station. You can step off the train anytime – if the home inspection is a mess or for any other reason. 
But if the train doesn’t get rolling, we may not be able to make it to closing on time. 

Also, the financing contingency of your purchase agreement may require you to apply for your loan within a certain timeframe. If so, signing this initial paperwork fulfills that obligation.

Not much. Which, in this case, isn’t a good thing. 

Signing these papers kicks off the loan process—they’re your request that we work on a loan. 

If we think you’re gonna request a loan, we’ll do as much as we can to prepare – like asking you for updated documents we know we’ll need. We’re also always available to answer questions and provide any information you and your real estate broker need. 

But the real work of setting up your loan can’t get rolling until you’ve applied. Delays to signing your initial paperwork can turn into missed contract deadlines or postpone closing.

The Loan Estimate (LE) is an official, standardized document that outlines your loan’s terms, estimated monthly payments, and closing costs. 

It takes the numbers you’ve already seen on a loan summary and puts them into an official format – it’s just your loan summary all dressed up for the big dance in a cute little tuxedo. 

Check out the Loan Summary to Loan Estimate mapping tool for an overview of how the numbers transfer. 

The Loan Summary is an easy-to-read, one-page document we use to share detailed numbers.

The Loan Estimate is the official, legally mandated disclosure required when we go from talking about a loan to actually setting it up.

Great question! Our requirement to send a Loan Estimate is triggered when you meet specific requirements under the Real Estate Settlement Procedures Act.  Typically, the final element that “triggers RESPA” (as we say in lending lingo) is receipt of the address of the property you intend to purchase. 

Technically, there’s nothing to stop us from using the Loan Estimate earlier, but we don’t for two reasons:

Simplicity—We think our loan summary provides an at-a-glance view of your loan terms (rate, loan type, term), payment (itemized and totaled), and cash due to closing (itemized, sub-totaled, and totaled) in a one-page format that’s easy to read.

Fear of Commitment—The estimates for many costs on a Loan Estimate are binding on us, even though a majority of them are charged by others. And many costs change based on the specific property. Before putting ourselves on the hook, we want as much information as possible, especially about the property you plan to purchase. 

But don’t worry. We know how important the numbers are to your planning, and we never phone it in. Where we don’t know an exact figure, we err on the safe side. If there’s a surprise with a dollar sign attached to it, we want it to be happy. 

A Loan Estimate is a snapshot of your loan terms at a moment in time. If we lock your rate after the Loan Estimate is created, we’ll send an updated LE that shows the lock and any other changes. 

We’ll ask you to sign every LE we prepare to acknowledge receipt. When you sign a Loan Estimate that’s “in the past,” you’re helping us keep a legally required paper trail of the state of your loan every step of the way.

A Loan Estimate captures your loan details at a specific point in time. 

When we make changes—like locking your rate, adjusting the loan amount, or any other terms—we’ll send a revised LE showing those updates. 

We’ll ask you to sign every LE we prepare to acknowledge receipt. When you sign an LE that’s “in the past,” you’re helping us keep a legally required paper trail of the state of your loan every step of the way.

Great question! When earnest money isn’t reflected on the Loan Estimate because we haven’t yet received banking records showing it has cleared your account.

Here’s why that matters: We need an accurate picture of your overall funds while processing your loan. If we “see” earnest money in your account and also apply it as a credit toward your closing costs, we’d be counting the same dollars twice in our tally of Dollars You Have.

Once you share records showing earnest money has cleared your account, we’ll shift to showing it as a credit on your Loan Estimate. 

In the meantime, if earnest money isn’t reflected on your Loan Estimate, you can mentally subtract it from the amount due at closing.

And no matter what, earnest money will be applied as a credit toward your down payment at closing.

Good eye and good question!

The aggregate escrow adjustment is a one-time credit applied to your escrow account at closing. Your “escrow” is the account in which your lender holds money to pay property taxes and insurance. By law, an escrow balance can never exceed actual costs plus a two-month cushion. 

We run a projection, and if your escrow account bumps above the legal limit, we apply an aggregate escrow adjustment. We want our loan summaries to be as accurate as possible, so we include the aggregate adjustment. 

I don’t have a good answer as to why the credit doesn’t show on the LE. It should, but it doesn’t. 

The good news is that an aggregate adjustment is always a credit, so if you see one on a loan summary and none on your LE, you’ll likely have slightly less cash due at closing. We apologize for any cognitive dissonance caused by the mismatched numbers—they bother us, too!

As we draw closer to closing, the numbers undergo one more wardrobe change—to a Closing Disclosure (CD)—and the aggregate adjustment reappears.

Let us know! Stuff can change. Months may have passed since we set up your pre-approval. If you spot anything out-of-date or otherwise inaccurate, fill us in. 

The initial application is the first draft of a living document. It evolves as we process your loan – we update it as we gather new or more recent information. 

However, don’t get hung up on bank, investment, retirement, loan, or credit card balances. Let us know about any significant changes. But normal fluctuations are expected. 

The best we can do is capture a snapshot in time. Our forms always reflect the most recent info we have on file. For bank, investment, and retirement accounts – a statement or digital asset report. For loans and credit cards – your credit report.

The balances shown on your initial application come from the credit report we pulled when you applied. Credit card companies report to the credit bureaus once a month – typically when they issue your bill. So the balance on your mortgage application should match your last billing statement. 

Fun fact: If you’re looking for a quick and easy way to boost your credit score, pay attention to the “Closing Date” on each credit card statement and engineer a balance that’s 30% of the limit or less on that day each month. Presto! Higher credit score!