Which document is essential to verify a borrower's ability to repay a mortgage?

The loan application, often referred to as the 1003 form, is crucial for verifying a borrower's ability to repay a mortgage. This document provides comprehensive information about the borrower's financial situation, including their income, assets, debts, and employment history. By analyzing the details in the loan application, lenders can assess the borrower's financial stability and capacity to make mortgage payments.

Additionally, the loan application contains information that helps lenders perform a thorough analysis for qualifying borrowers, including evaluating debt-to-income ratios and determining the risk associated with lending. This assessment is fundamental in ensuring that borrowers are not only qualified but also able to manage their mortgage payments sustainably.

In contrast, a credit report primarily shows a borrower's credit history and current credit score, which are important but do not offer a complete picture of repayment ability. An escrow agreement pertains to the management of funds that are set aside for property taxes and insurance and does not address the borrower's repayment capacity. A title deed establishes ownership of the property but does not provide insight into the borrower's financial health or likelihood of repayment. Therefore, the loan application is the most essential document for understanding a borrower's overall ability to repay a mortgage.