When I initially speak with someone interested in a residential mortgage most of the time the first question I am asked is either (1) what are your rates. Or (2) what do I need to do to qualify for a loan?

The purpose of this series is to address the steps in completing a mortgage loan application for qualifying purposes. I will make one quick statement on rates. The question is not what are my rates, but what is your, the customers, rate. Home loan rates are dependent on many factors such as your loan profile, the type of loan needed and the purpose of the loan. The rate is about you.

We are going to be discussing the 1003. What you ask? I don't understand what it is about government, quasi-government or whatever, it seems they can only speak in terms of numbers or anachronism. How about the Uniform Residential Loan Application? Yes, it is called that too.

We are actually going to start with Part II: The Property Information and Purpose Of Loan. You may be wondering why don't you start with Part I? Let me just say that Part I Type of Mortgage and Terms of Loan is what we are going to figure out after the application has been completed. Please don't ask me to understand or explain the thinking of the bureaucrat that put this form together.

Is this a purchase or a refinance? Or maybe a construction loan or construction-permanent financing? Various loan programs will have different guidelines and pricing (aka rates) depending on the purpose of the loan. It is YOUR rate not the lenders to be determined.

This next question is a big one. Will this loan be for a primary residence, a second home or investment property. Be truthful! I've seen a lot of crafty responses given here.

If it is your primary residence then you plan to live there. Loan agreements will require that if you declare the property as your primary residence then you are expected to occupy the property within 60 days of closing AND you intend to occupy the property for at least a year. If this is not the case and you know it, then at the very least you will be in default if not guilty of mortgage fraud!

Is this to be a second home? This declaration represents that you intend to occupy the residence on occasion. If you have a property designated as a second home, but you have a tenant ready to lease the dwelling for the next 12 months you don't have a second home. You have an investment property. I can not tell you how many times I've had clients call, well coached, stating they want to purchase said property as a second home. It is not worth being guilty of mortgage fraud trying to save a little on rate. It is YOUR rate not the lenders you are trying to determine.

Is this investment property? You are going to have a larger down payment or equity position required and you are going to have a higher rate. Why? The latest statistics I have heard is that investment property has a 400% greater likelihood of going into default. Don't play games here! It is what it is. You may find a lender to play with you, just not me.

How many units are involved? This means is this a single family residence, a duplex, triples or quadruplex. Residential mortgage financing is limited to 1-4 unit properties. If the building that you own has more than four units you will need a commercial loan not a residential mortgage. If you are seeking financing for 2 or more detached dwellings you are applying for more than 1 loan. And yes, your rate will be determined by how many units you are financing.

If you are considering a refinance your lender will need to know how much you purchased the property for. How much do you presently owe on the property? It is helpful to also know what you think the property is worth today. A real wildcard in today's market. What is the purpose of the refinance? Are you just simply looking to reduce your rate or change your term (number of years)? Are you considering borrowing more than you presently owe, aka cash out?  If so, what do you intend to do with the additional cash? Guess what, the answers to these questions will be factors in determining your rate.

Who is going to be on the deed or who is going to own this property. Some loan programs require that all owners also be on the loan and some do not.

Lastly, in this section what will be the source of your down payment and/or settlement charges? How do you plan to pay for any cash needed for closing?

Wow, I had now idea I would write this much about this little section.

Oh, it is also helpful to know if the property is something other than "stick built" like modular, manufactured log home, etc as this may impact your rate and terms

My mission is to provide residential mortgage lending services in Greenville, Pitt County and Eastern North Carolina. I am determined to deliver these services with openness, reliability and resourcefulness. The foundation of my activities accepts that I consider the needs of my customers and business partners ahead of mine. As a professional I strive to know more about my vocation than my competition, while enriching others.

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Jay Williams

 www.myhomeloanwithjay.com