9 Questions That Your Mortgage Lender May Ask
While applying for a home loan, a lender may not put you in an interview and ask questions, but completing loan application form can be like an interrogation. You may sweat only if you’re not aware of the answers to these 9 questions suggested by a leading real estate agent Del Mar.
Here are the 9 questions that you should know the answers to.
- Where is your income proof?
You must have proof of at least two years’ worth of income prepared. You must come ready with copies of checks, pay stubs, paid independent contractor invoices and other relevant documents that prove your employment. Make sure you furnish other sources of income that may include alimony or child support.
- What assets you own?
A lender may want to know about all cash reserves you possess. A balanced asset portfolio explains your investment goals and planning are not exclusively dependent on your home value appreciation. There are other resources too that can be tapped during an emergency if you need money to make mortgage payment.
- What about outstanding debts?
Typically, the more debt you owe the less chance you have to qualify for a mortgage. More debts denote that you have to pay higher interests on the amount you have borrowed. Debt-to-income ratio limit for conventional mortgage is 43% as intimated by best realtor Del Mar. This ratio evaluates how much of your total income before tax is spent towards paying housing cost including principal, interest, insurance, tax, mortgage insurance and homeowners association fees. The last two are subject to applicability. Other debts like student loans, credit card debts, and car loans also affect debt-to-income ratio.
- What is your credit score?
Perhaps you’re already aware of this as you must have already pulled the credit report and checked it. Before you apply for a loan, you should have your credit score in the best possible shape by paying back debts and disputing discrepancies found on the report. Though it may take time, it can save thousands of dollars over the tenure of the loan.
- Have you opened new credit?
When you’re about to close, the lenders will verify if you have mucked up your debt-to-income ratio or credit. Again they will pull your credit report to confirm that you have not opened a new credit or added new debts. Best realtors Del Mar suggests their clients not to take a new debt from the time they apply for a mortgage until closing.
- How much will you disburse as down payment?
Larger down payment ensures more chance to convince your lender that you’re taking this homeownership seriously and you won’t walk away even if situation becomes tough. The down payment amount will decide if you’re eligible for a home loan, how much loan you can get and what interest rate the lender will offer.
- How will you use your property?
Owning a property as an occupant comes with a couple of regulations, rates, terms, eligibility criteria and risks. If you’re buying the property from investment perspective, let the lender know that. To get you the best loan, the lender should know your plan about the property.
- Is there any lawsuit against you?
A lawsuit that involves a financial judgement may after your financial status. If you’re involved in such a lawsuit, you have to prove before your lender why the judgment won’t have any negative impact on your financial health.
- Are you divorced?
If you’re divorced recently, your lender may ask you about it. Though they won’t ask you about all the dramas that led to your divorce, they just want to know how the divorce affected you monetarily.
Get the answers to these questions beforehand so that you can answer to your lender’s questions with confidence.