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When You’re Buying: Things A Lender Will Ask
March 7, 2010 by Shawn Stagg · Leave a Comment
It might feel like you’re having to tell your life story, but if you want an approval on your loan application for a new home, your lender will want to know a lot about you first. The days of easy mortgages are behind us. You will have to prove that you’re credit worthy in order to get the money you need. Don’t worry, though. If you’ve been conscientious with your credit history and money, you’ll be fine.
Here are some of the things you’ll be expected to share about:
-Information about your employment history and income. This will include your current employer and how long you’ve held the job. You’ll also give income information.
-How much money you have. This includes your assets, how much money you have in the bank, and cash reserves.
-What kind of debts you have. Your lender will be curious about credit card debt, auto loans, and monthly payments.
-Your down payment. Your lender will want to know how much money you plan on putting down on your new home, and where you got the money (they want to know if it is yours, a gift from someone, or a loan or grant).
-The type of property you want to buy and what you’ll use it for. Are you buying a single family home, a condo, or maybe a duplex? And will you be living there, or are you purchasing it as an investment?
-The purpose of your loan – refinancing or mortgage. If you’re refinancing, the lender will ask if you intend to take cash out to pay other debts.
Here are the best ways of answering the above areas of questioning (of course, you will want to be truthful):
-You’ve been steadily employed for two or more years with the same employer or in the same line of work.
-You have low debt.
-The property is a single family home and is to be your primary residence.
-The loan is for a home purchase.
-You have, at the very least, five percent of the property’s value for a down payment. 20 percent is even better.
-After closing, you’ll have a minimum of two months’ of mortgage payments in your bank account.
Here are responses that could present problems:
-You are self-employed or a contractor. If this is the case, don’t panic. But you will likely have to provide plenty of additional information to prove your income.
-You have lots of debt.
-You want the loan to buy a condo or duplex that you’re going to use for vacations or for a rental property.
-You won’t have any money left once you’ve paid your down payment.
-Your down payment is three percent or less and it was borrowed.
If you have all positive responses for your lender, you should have good luck getting your mortgage. Do what you can to assure that you can to create a positive atmosphere for a loan to be granted. Get rid of debt, save up a bigger down payment, and have more savings left over.
